Relief to NALCO: CESTAT sets aside Time-Barred Excise Duty Demand on Goods Captively Consumed [Read Order]

In a major ruling, the Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has granted relief to National Aluminium Company Limited ( NALCO ) by setting aside the time-barred excise duty demand on goods that were captively consumed.

The assessee being a Public Sector Undertaking, is engaged in the manufacture of Aluminium in its Smelter Plant located at Angul, Odisha. The main raw material used by the appellant is ‘Calcined Alumina’, which is manufactured at its refinery located at Damanjodi, Odisha. The ‘Calcined Alumina’ is manufactured from basic raw material, Bauxite Ore.

In addition to export is also stock transferred for captive consumption from Damajodi to Angul on payment of appropriate duty of excise, on the transaction value determined as per the CAS-4 in terms of Section 4 of the Act read with Rule 8 of Valuation Rules

Mr. Ravi Raghavan, representing the assessee submitted that the value of goods transferred to another unit for captive consumption is to be in accordance with Rule 8 of the Valuation Rules and not Rule 4. Therefore, the impugned order is to be set aside on the ground alone

He further submitted that the quantum of Calcined Alumina sold to independent buyers is miniscule (approximately 1%) as against the 39% cleared to their sister unit in Angul for consumption during the relevant period, therefore, the said prices cannot be adopted as representative prices for stock transfer made by the appellant for captive consumption.

The bench found that the goods were cleared to another plant not for captive consumption whereas in the case in hand, the goods in question have been cleared to their sister unit for captive consumption in manufacturing of excisable goods i.e. aluminum, which has been  cleared by the appellant on payment of duty. Therefore, the said decision cannot be applied to this case.

Therefore, further two member bench of the tribunal comprising Ashok Jindal ( Judicial member) and K.Anpazhakan ( Technical member) held that the assessee  has correctly paid the duty on the goods in question, which has been captively consumed by the sister unit for manufacturing of excisable goods in terms of CBEC Circular No.692/8/2003-CX dated 13.02.2003. On merit, the assessee has rightly paid the duty as per CAS-4 in terms of Rule 8 of the Valuation Rules

CESTAT held that Rule 4 of the Valuation Rules, was not applicable in the facts and circumstances of the case, accordingly, appeal was allowed.

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