TMI Blog2015 (4) TMI 816X X X X Extracts X X X X X X X X Extracts X X X X ..... xcise (Valuation) Rules, 1975, certain steps are to be taken. - The clarification, pertains to calculation of value of goods captively consumed under Rule 6(b)(ii). It is this Rule which is undoubtedly applicable in the present case. Thus, for the first time, only in October, 1996, it was clarified that the cost of material, labour cost and overheads including administrative cost, advertising expenses, depreciation, interest, etc., would be included in the cost of production. The period with which we are concerned is prior to October, 1996, i.e., April, 1994 to September, 1996. It, therefore, cannot be said that the respondents-companies made intentional misdeclaration with the purpose to avoid payment of correct excise duty. We thus, find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment contends that the respondents had not declared the correct value of the captively consumed yarn during the years 1994-95, 1995-96 and 1996-97 as the value declared was much lower than the value arrived at on the basis of Cost Audit Report furnished by their cost accountants. Thereafter, an investigation was held and it was further observed that the respondents had not included the value of administrative overheads, bonus, gratuity, interest, conversion charges and depreciation charges in the assessable value of the yarn. Show cause Notices were served upon the respondents in the year 1999 demanding differential duty along with interest. The notices alleged that there had been duty evasion. The said show cause notices were adjud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent-companies were issued sometime in the year 1999 which was much beyond the period of six months stipulated in Section 11A of the Central Excise Act. The Department took the plea that the extended period of limitation contained in the proviso to sub-section (1) of Section 11A would be applicable because of the reason that there was intentional misstatement or declarations by the respondent-companies in order to evade taxes. The CESTAT has found it otherwise. Two things which are highlighted by the CESTAT, while accepting the arguments of the respondents-assessees are the following: - (1) The declaration which was filed with the Excise Department in the prescribed form and prepared by the cost accountants was keeping in view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofar as the overheads are concerned, Rule VII stipulates that details of administrative, selling and distribution overheads and the amounts applicable to yarn cloth and processed cloth shall be maintained in such a manner so as to enable the company to fill up the particulars in the cost of production and cost of sale statements of each count of yarn /type of cloth etc. These are to be in Proformae B, C, E, F, L and M specified in Schedule II respectively. Thus, there is a distinction made between the cost of production that has to be given in Proforma B and cost of sale statement as per Proforma C. This becomes further clear when Rule XIII pertaining to cost statements as that also mandates giving the cost statements in Proforma B and C. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s captively consumed - Addition of Profits -Reg.' In para 3 thereof while issuing the clarification as to how the Gross Profit, i.e., profit before depreciation and taxation or 'Profit before tax' or any other profit has to be arrived at, it is also clarified that for the purposes of calculation of value of goods captively consumed under Rule 6(b)(ii) of Central Excise (Valuation) Rules, 1975, certain steps are to be taken. For convenience sake, we will reproduce this portion of the said circular as we are directly concerned therewith: It is hereby clarified that for calculation of value of the goods captively consumed under Rule 6(b)(ii) the following steps are to be followed: - (i) The cost of production of the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X
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