JUDGMENT
V.K. Agrawal, Member (T)
1. The issue in this Appeal, filed by M/s. Eicher Tractors, relates to the assessment of inputs cleared by them as such.
2. Shri B.L. Narasimhan, learned Advocate, mentioned that the Appellants manufacture I.C. Engines and Parts thereof and avail of CENVAT credit of the duty paid on the inputs under the CENVAT Credit Rules; that at time they clear some inputs as such to their Marketing Division by reversing the CENVAT Credit taken by them at the time of receipt of inputs; that the Revenue has confirmed the demand of duty and imposed penalty on the ground that they were required to pay duty based on selling price of their Marketing Division. The learned Advocate submitted that during the relevant period, Rule 3 (4) of the CENVAT Credit Rules provides that when inputs on which CENVAT Credit has been taken, are removed as such from the factory, the manufacturer shall pay an amount equal to the duty of excise which is leviable on such goods at the rate applicable to such goods on the date of such removal and on the value determined for such goods under Section 4 of the Central Excise Act; that there is no dispute as to the rate which was to be applied on removal of inputs to the Marketing Division; that the expression “on the date of such removal” has been used in conjunction with the expression “rate applicable to such goods” and the expression “on the value determined for such goods” has been used after the expression “on the date of such removal” and these two expressions have been separated by using the word ‘and’ between them; that, therefore, the expression ‘date of removal’ is used only for the purpose of rate applicable on inputs and not for determining value of such goods; that accordingly the value which was determined by the inputs manufacturer at the time of removal of inputs is to be adopted for the purpose of Rule 3(4) of CENVAT Credit Rules. He also contended that the value for excisable goods has to be determined under Section 4 of the Central Excise Act only when such goods are manufactured and removed by the manufacturer; that since the person who is taking credit on the inputs is not a manufacturer, the input manufacturer alone is the manufacturer of inputs; that thus the value under Section 4 as indicated in the invoice of input manufacture only has to be adopted for the purpose of removal of inputs as such. He mentioned that the Tribunal in their own matter has held, vide Final Order No. 442-443/04 dated 14.5.2004, relying upon the decisions in the case of CCE, Vadodara v. Asia Brown Boveri Ltd., 2000 (129) ELT 228 (T-LB) and CCE, Coimbatore v. American Auto Service, 1996 (81) ELT 71 (T-LB) that “what an assessee is required to do when he removed inputs as such can only be to restore the credit which he had taken …. Nothing more was required of them.” Finally, the learned Advocate relied upon the Board’s Circular No. 643/34/2002 CX dated 1.7.2002 wherein it has been clarified that when the inputs are transferred to a sister unit, “it would be reasonable to adopt the value shown in the invoice on the basis of which CENVAT Credit was taken by the assessee in the first place.”
3. Countering the arguments, Shri S.C. Pushkarna, learned Departmental Representative, submitted that as per Rule 3(4) of the CENVAT Credit Rules, the value has to be determined under Section 4 of the Central Excise Act when the inputs are removed as such; that as per Section 4, the value shall be the transaction value at the time and place of removal; that thus the value of the inputs has to be determined at the time of their removal as such by the Appellants. He, further submitted that the earlier decisions of the Appellate Tribunal are not applicable as the provision interpreted by the Larger Bench of the Tribunal in Asia Brown Boveri was different and the present Rule 3(4) of the CENVAT Credit Rule cannot be treated as successor to Rule 57 F(1)(ii) of the Central Excise Rules, 1944. Finally, he contended that the Board’s Circular dated 1.7.2002 does not support the case of the Appellants as it clearly clarifies that “When inputs or capital goods, on which credit has been taken, are removed as such on sale, there should be no problem in ascertaining the transaction value by application of Section 4 (1) (a) or the Valuation Rules.”
4. We have considered the submissions of both the sides. MODVAT Credit Scheme (now CENVAT Credit Scheme) was started in 1986 with a view to remove the cascading effect of Central Excise duty which is imposed both on inputs and final products. This Scheme allows a manufacturer to take the credit of the duty paid on inputs and discharge the duty liability on his final product by debiting the CENVAT Credit Account. Thus, CENVAT Credit Scheme envisages bringing of inputs, taking CENVAT Credit, use of inputs in or in relation to the manufacture -of final product which are to be removed on payment of duty by debiting CENVAT Credit Account. Thus, the inputs in respect of which CENVAT Credit has been taken are to be used in the manufacture of final products. As a facility to the manufacturer, Rules also permits the manufacturer to remove the inputs as such on fulfillment of certain conditions specified in Rule 3(4) of the CENVAT Credit Rules, 2001. The conditions specified are that the manufacturer “shall pay an amount equal to the duty of excise which is leviable on such goods at the rate applicable to such goods on the date of such removal and on the value determined for such goods under Section 4 or Section 4A of the Act, as the case may be…” It is thus apparent that the duty shall be paid on the value determined for such goods under Section 4 of the Act. As rightly emphasised by the learned Departmental Representative, Section 4 of the Central Excise Act provides that where the duty is chargeable on excisable goods with reference to value, on each removal of the goods, such value shall, in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, be the transaction value. In terms of Section 4, the transaction value at the time and place of the removal will be the assessable value. In view of the specific provisions of Rule 3 (4) of the CENVAT Credit Rules, the duty is payable by the Appellants on the transaction value of the goods at the time and place of removal from their factory. This is the clarification given by the Board vide Circular No. 643/34/2002-CX., dated 1.7.2002. The learned Advocate has relied upon that part of the clarification where the inputs are not sold by the assessee and the same are only removed to a sister unit. In the present matter, the inputs are sold to independent buyers. There is no substance also in the submission of the learned Advocate that Section 4 will not apply to the Appellants as they are not manufacturer of the impugned goods. The Appellants are availing of concession given by the law and they have thus to comply with the conditions specified in the Rules.
5.1 The decision of the Larger Bench of the Tribunal in the case of Asia Brown Boveri and American Auto Service is not applicable to the facts of the present matter as the provisions of Rule are completely different. Rule 57F(1) (ii) of the Central Excise Rules which has been considered by the Larger Bench reads as under:
“57F(1) — The inputs in respect of which credit of duty has been allowed under Rule 57A may –(i) …………………
(ii) Be removed subject to the prior permission of the Collector of Central Excise, from the factory for home consumption or for export on payment of appropriate duty of excise or for export under bond, as if such inputs have been manufactured in the said factory.
Provided that where the inputs are removed from the factory for home consumption on payment of duty of excise, such date of excise shall in no case be less than the amount of credit that has been allowed in respect of such inputs under Rule 57A.”
5.2 The present Rule 3(4) of the CENVAT Credit Rules reads as under:
“When inputs or capital goods on which CENVAT credit has been taken, are removed as such from the factory, the manufacturer of the final products shall pay an amount equal to the duty of excise which is leviable on such goods at the rate applicable to such goods on the date of such removal and on the value determined for such goods under Sub-section (2) of section 3 or section 4 or section 4A of the Act, as the case may be and such removal shall be made under the cover of an invoice referred to in Rule 7.”
5.3 In view of the change in the provision of Rules, the precedent of Asia Brown Boveri will not be applicable. The judicial decisions are made in the setting of the fact of a particular case and one additional or different fact may make a difference between conclusions in two cases. It has been cautioned by the Apex Court in CCE, Calcutta v. Alnoori Tobacco Products, 2004 (95) ECC 207 (SC) : 2004 (170) ELT 135 (SC) that Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decisions on which reliance is placed. Thus, in our view the Appellants are liable to discharge duty liability on the value at which the inputs were sold as such to the customers by their Marketing Division.
6. As a Coordinate Bench of the Tribunal has taken a different view in the Appellant’s own matter, we place this matter before the Hon’ble President with a request to constitute a Larger Bench to decide the following question:
“When inputs, on which CENVAT Credit has been taken are removed as such from the factory, whether the duty of excise is to be paid on the basis of assessable value as has been determined by the original manufacturer at the time of removal of goods or on the basis of value at which the inputs are sold by the Appellants to their customers in terms of the provisions of Rule 3(4) of the CENVAT Credit Rules?”