TMI Blog1987 (12) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... costing, duly certified by their auditor. However, since the company s balance sheet for the year was not ready at the time of filing of price lists, the company had been showing a notional margin of profit of 5% or 10% as the case may be, over and above the cost of production. The said price lists had been approved provisionally under Rule 9B of Central Excise Rules pending verification of the costing details furnished by the company as also verification of the company s gross profit as reflected in their balance sheet for the relevant period. The learned Assistant Collector had observed that the value of camel back included the following expenses : (1) expenses incurred on strip cutting; (2) staff salaries; (3) all other overhead expenses as shown in Annexures A, B and C to the adjudication order apart from the expenses already taken into consideration by the company. The appellant was accordingly directed to include such expenses while working out the cost of production of camel back and file revised price lists. The price lists Nos. 37/82, 306/82, 1A/83-84 and 339/8t-85 were also approved accordingly. The appellant had contended that expenses incurred towards labour for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur charges are not to be included in the assessable value. He states that the appellant had duly furnished the details as to the cost of production of camel back duly certified by their auditor and arriving at assessable value after adding the cost of production by a notional profit of 5 to 7% as the case may be. The learned Assistant Collector had raised the cost of production to a higher figure. Shri Lakshmikumaran has referred to a judgment of the Hon ble Supreme Court in the case of P.C. Cheriyan v. Mst. Barfi Devi reported in 1979 E.L.T. (J-593) where the Hon ble Supreme Court had held that retreading of old tyres does not bring into existence a commercially distinct or different entity as the old tyre retains its original character or identity as a tyre. Nor does it completely transform it into another commercial article although it improves its performance and serviceability as a tyre. So from retreading no new or commercially distinct article emerges and, therefore, retreading is not process of manufacture . Shri Lakshmikumaran further states that cutting expenses from sheet to strip are not to be added for computing the cost of camel back. The value of the waste of the cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 944 and Rule 6(b) of the Central Excise (Valuation) Rules, 1975 are reproduced below :- Section 4(1)(b) 4(1)(b) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value shall, subject to the other provisions of this section, be deemed to be - XXX XXX XXX (b) where the normal price of such goods is not ascertainable for the reason that such goods are not sold or for any other reason, the nearest ascertainable equivalent thereof determined in such manner as may be prescribed. Rule 6(b) Where the excisable goods are not sold by the assessee but are used or consumed by him or on his behalf in the production or manufacture of other articles, the values shall be based - (i) On the value of the comparable goods produced or manufactured by the assessee or by any other assessee : Provided that in determining the value under this sub-clause the proper officer shall make such adjustments as appear to him reasonable taking into consideration all relevant factors and, in particular, the difference, if any, in the material characteristics of the goods to be assessed and of the comparable goods; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the new Section 4(1)(b). Now, the price of an article is related to its value (using this term in a general sense), and into that value are poured several components, including those which have enriched its value and given to the article its marketability in the trade. Therefore, the expenses incurred on account of the several factors which have contributed to its value upto the date of sale, which apparently would be the date of delivery, are liable to be included. Consequently, where the sale is effected at the factory gate, expenses incurred by the assessee upto the date of delivery on account of storage charges, outward handling charges, interest on inventories (stocks carried by the manufacturer after clearance), charges for other services after delivery to the buyer, namely after sales service and marketing and selling organisations expenses including advertisement expenses cannot be deducted. If will be noted that advertisement expenses, marketing and selling organisation expenses and alter sales service promote the marketability of the whole and enter its value in the trade, where the sale in the course of wholesale trade is effected by the assessee through its sales org ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be raised at this stage. The Hon ble Kerala High Court in the case of CAT v. India Sea Foods reported in 168 ITR 721 had held that the Tribunal was right in Law in allowing to raise for the first time before it, the ground pertaining to the correct previous year in so far as the assessment of capital gains was concerned. Accordingly we overrule the objection of the learned S.D.R. On coming to the merits of the matter we would like to observe that the gross profit of 9.0294% added to the cost of manufacture already includes salaries and administrative expenses. Administrative overheads clearly allocable to other two activities (manufacture of solid tyres and re-treading of old tyres) cannot go into the costing of camel back. Since the assessment was at sheet stage, post-assessment costs on cutting strips out of sheets cannot be included. If the revenue want to shift the assessment stage to strips, then logically the cutting wastage should also be taken into account. Clearance of camel back from other factories is generally in sheet form, however, Item 16A(2) covers both sheets and strips whereas in the appellants case the excise duty is levied on the manufacture of camel back. As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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