2023 (3) TMI 730 - AT - Central Excise

Valuation - inclusion in the assessable value or not - IDSC/ICNC debit note raised by Bhadrachalam Unit - component of cost of raw materials of the appellant or not - unabsorbed overheads due to idle capacity - HELD THAT:- The Larger Bench in M/S ITC LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI [2016 (4) TMI 280 - CESTAT CHENNAI] answered the reference, holding that the decision of the Chennai Bench of the CESTAT rendered in Final Order No. 542/2010 dated 11.05.2010 in the Revenue’s appeal against M/s. Eveready Industries Ltd. [2011 (4) TMI 141 - CESTAT, CHENNAI] and the subsequent decision of the same Regional Bench as reported in CCE, CHENNAI VERSUS M/S. EVEREADY INDUSTRIES (I) LTD. [2011 (4) TMI 141 - CESTAT, CHENNAI] represent the correct position in law.

The findings of the Larger Bench are The percentage of loading on such cost of production, mandated by provisions of Rule 8 for remittance of excise duty by the Bhadrachalam unit cannot not however be considered as comprised in the cost of the raw material consumed for manufacture of packaging material and thus constituting the cost of production at the Chennai unit.

Applying the dictum laid by the Larger Bench in M/S ITC LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI [2016 (4) TMI 280 - CESTAT CHENNAI], it is held that the demand, interest and penalties cannot sustain and requires to be set aside - The issues are therefore answered in favour of the assessee.

Appeal disposed off.