CESTAT Quashes Excise Duty Demand on Manufacture of TMT Bars on ground of Inclusion of Rule 10(b) of Central Excise Valuation Rules [Read Order]

The New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the excise duty demand on manufacture of TMT Bars on the ground of Inclusion of Rules 10(b) of Central Excise Valuation Rules,1944. 

Nalwa Steels and Power Ltd, the appellant assessee was a manufacturer of TMT bars of various grades and it sold them to independent buyers as well as to two of its inter-connected undertakings of Jindal Steel Power Ltd and Jindal Power Limited. 

The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the demand of Rs. 1,97,57,985/- as differential central excise duty from the assessee for the period 2011-12 to April 2015, and the amount, Rs. 1,96,92,460/- was confirmed for the period 2011-12 up to November 2013 under Rule 11 of the Central Excise Valuation Rules. 

Vishal Agrawal and Tuhina Sinha, the counsels for the assessee contended that the assessee was not even required to pay excise duty on the value at which JSPL sold the goods to its customers or on 110% of the cost of production under where the goods were consumed by JPL. 

Also submitted that since Rule 10(b) of Central Excise Valuation Rules applies to this case, Residual Rule 11 cannot be applied and the demand of duty under Rule 11 of Central Excise Valuation Rules cannot be sustained and needs to be set aside. 

Bhagwat Dayal and Rakesh Agarwal, the counsels for the department relied on the decisions made by the lower authorities and contended that Rule 10(b) of the Central Excise Valuation Rules do not apply to this case because not only are the assessee and JSPL and JPL inter-connected undertakings but the assessee holds equity in JSPL. 

Further, JPL was a subsidiary of JSPL. Therefore, Rule 10(a) of the Central Excise Valuation Rules does not apply and the residual Rule 11 of the Central Excise Valuation Rules should be applied. 

The Bench observed that since Rule 10(b) of the Central Excise Valuation Rules applies to this case, residual Rule 11 of the Central Excise Valuation Rules cannot be applied. 

The two-member bench comprising Dilip Gupta (President) and Subba Rao (Technical) quashed the excise duty demand while allowing the appeal filed by the assessee. 

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