Per C.N.B. Nair:

The common issue raised in these appeals is whether Board's valuation Circular No. 692/8/2003 dated 13.2.2003 [reported in 2003 (54) RLT M95] on valuation of captively consumed goods is applicable to all pending cases or is applicable only to goods removed for captive consumption from the date of issue of that Circular.

2. The period of removal of the goods for captive consumption in all these cases is prior to the issue of the Circular. The Revenue's contention is that there were previous Circulars also on the subject (No. 258/92/96-CX dated 30.10.96 [reported in 1996 (17) RLTM37], Order No. 24/12/93 dated 31.12.93, F.No. 6/12/87-CX dated 31.3.98, F.No. 6/702/88-CX dated 11.3.88 etc.) and that valuation should be made for a given period in terms of the Circular in force during that particular period. This contention is made on the ground that it is well settled that Circulars are prospective in their operation. Revenue has relied on the judgement of the Apex Court in the case of CCE vs. Eswaran & Sons Engineers Ltd. - 2005 (66) RLT 222 (SC)=2005 (179) ELT 272 (SC) in support of this contention.

3. The contention on behalf of the assessees is that the latest Circular dated 13.2.2003 lays down the correct method of the costing and it governed the valuation of all pending cases, irrespective of whether the goods in question were removed prior to the issue of that Circular or after its issue. It is being pointed out that the Circular specifically states that "general principles of costing" would be adopted for applying Rule 8 and that the costing standards circulated under the said Circular have been developed by the Institute of Cost & Works Accountants of India (ICWAI). It is also pointed out that para 3 specifically clarifies that cost of production of captively consumed goods will 'henceforth' be done strictly in accordance with CAS-4 (the standard developed by ICWAI). The Circular also states in para 4 that the Board Circular no. 258/92/96-CX dated 30.10.96 "may be deemed to be modified accordingly so far it relates to determination of cost of production for captively consumed goods". It is the submission of the learned Counsel that in view of deemed modification of the earlier Circulars, those Circulars cannot be applied without the modifications brought about under the later Circular.

4. Learned Counsel has also submitted that it is well settled that an assessee can seek the benefit of a beneficial circular even with regard to a pending dispute and that a beneficial circular has to be applied retrospectively while oppressive circulars are to be applied prospectively. Learned Counsel also pointed out that it is well settled 1996 (17) RLT1125 (SC)=1996 (88) ELT 638 that revenue cannot be heard to contend against its own circulars. It is well settled 1999 (34) RLT 365 (SC)=1999 (112) ELT 765 that an assessee can contest the validity of instructions and that Tribunal and Courts are not bound by the circulars. Learned Counsel has further contended that the judgement of the Apex Court in the case of CCE vs. Eswaran & Sons Engineers Ltd. (supra) is not contrary to these principles inasmuch as that judgement has also approved the proposition that an assessee has a right to claim and a Court may compel compliance with such instructions as are for the benefit of the assessee.

5. A perusal of the Circular dated 13.2.2003 makes it clear that what is being advised under that circular is to follow "the general principles of costing". The Circular also makes it clear that "ICWAI has since developed the costing standards.....". About the applicability of the circular and the effect of the new costing instructions on the previous instructions, the Circular states as under:

"3. It is "therefore, clarified that cost of production of captively consumed goods will henceforth be done strictly in accordance with CAS-4....

4. Board's Circular No. 258/92/96-CX dt. 30.10.96, may be deemed to be modified accordingly in so far as it re