Per C.N.B. Nair : M/s Steel Complex Ltd., a Government of Kerala Undertaking, is engaged in the manufacture of steel billets which are liable to central excise duty. The duty is based on value. The unit has been making losses and is before the BIFR.

2. Steel billets manufactured by the appellants are partly sold on ex-factory basis. The rest are sent to job workers for conversion of the billets into CTD Bars/Rods on job charge basis. After so converted, the CTD bars/rods are sold from the premises of the job workers.

3. The issue raised in the present appeal is the valuation of steel billets sent for job work to converters. The dispute is for period subsequent to 1.7.2000 when Section (Valuation) 4 of the Central Excise Act and Valuation Rules thereunder were substituted with new provisions. Since there was no sale prices in the case of clearances of billets to job workers the appellant adopted the sale price to ex-factory buyers for the valuation of billets cleared for job work and discharged central excise duty. Central Excise Authorities held that the sale price to other buyers cannot form the assessable value of goods sent for conversion, inasmuch as, under the new Section 4, valuation of goods is required to be done with regard to each transaction and not at the normal price at which the good are generally sold. It was also felt that goods cleared for conversion were required to be valued in terms of Rule 8 of Central Excise Valuation Rules, 2000. Appellants contested the proposals but failed before the lower authorities. Commissioner, Central Excise (Appeals), Cochin who passed the order impugned herein has held as under:

"6. The main argument of the appellant is that in the present case the factory gate price of billets is available and once the same is available this has to be construed as transaction value, even in respect of billets, removed to job workers for conversion. In this context, it is necessary to refer to the provisions of new Section 4, which came into force with effect from 1.7.2000. Sub-section (1) of Section 4 clearly states that the value has to be determined in respect of each removal of goods. In other words, there can be as many transaction values as the removal of goods and each has to be determined individually. Thus, the assessable value in respect of billets sold by the appellants at the factory gate will not, by itself, be applicable to the removals of billets to job workers. This was so the position prior to 1.7.2000, under old Section 4, when the assessable value was arrived at by determining the normal price. Since, the normal price concept has been done away with and the assessable value has now to be determined for each removal, reliance by the appellant on various case laws is inappropriate to the changed law.

7. In respect of removals of steel billets to job worker, the assessable value is, therefore, to be determined independent of the sales of such billets to other persons. Since the removals to job worker are not by sale, therefore, the provisions of clause (a) to Sub-section (1) of Section 4 would not have any application and one has to take resort to the provisions of clause (b). In other words, valuation of steel billets has to be determined under the provisions of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. Under these Rules, rule 8 caters to situations where goods are not sold and which are used for consumption by the manufacturer or on his behalf in the production/manufacture of articles. Here the job worker uses the billets on the behalf of appellant for production of CTD bars/rods. The submissions of the appellant that this rule only alters to situations where goods are captively consumed does not flow from the wordings of this rule. As the valuation of job work also falls within the domain of rule 8, therefore, under this rule, the assessable value would be 115% of the cost of production of steel billets. Further, this rule makes no