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Valuation of goods under captive consumption

Central Excise - By: - ajay singh - Dated:- 8-2-2016 - Facts of the case, In ITC LTD VS. CCE 2014 (7) TMI 696 - CESTAT CHENNAI Chennai CESTAT M/s. ITC Ltd. (Packing and Printing Division) is one of the Units/Divisions of M/s. ITC Ltd., engaged in the manufacture of packaging materials. The main raw material in the manufacture of packaging material is paper and paper board, which they received from their other unit, known as ITC Ltd., Badrachalam Paper and Paper Board Unit, Andhra Pradesh (herein .....

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ant of India (ICWAI) as per CBEC Circular No. 692/8/2003-CX dated 13.2.2003. 1.1 The appellant also cleared their manufactured goods packaging material to their other units mainly cigarette factories on payment of duty on the value as determined under Rule 8 of Valuation Rules, as per CAS-4 and also sold to outsiders. under Rule 8 provides value shall be 110% of the cost of production (115% prior to 5.8.2003). Issues:- I - Whether the IDSC/ICNC debit note raised by Bhadrachalam Unit have to be c .....

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een different factories of the group. As per the judgement of supreme court in the case of CCE Vs. Cadbury India Ltd. - 2006 (8) TMI 2 - SUPREME COURT OF INDIA, the Hon ble Supreme Court in the context of captive consumption held that no profit element/ advertisement and other expenses relating to sale of products could be added to intermediate products which were not sold in the market. Held that the adjudicating authority accepted the IDSC/ICNC debit notes raised to evaluate the operational ef .....

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aterial at the hands of the appellant for captive consumption under Rule 8 of Valuation Rules. Issue II - Rule 8 of Valuation Rules makes use of two words value and cost . When the same rule uses two words both the words cannot have same meaning. Further Rule 2 (c) defines value to be value referred to in section 4 of the Act. That is to say value stands for the amount on which excise duty is to be paid where duty is to be paid on advalorem basis. In the case of CCE, Chennai Vs. Eveready Industr .....

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cost of production at National Carbon Plant. Issue III - the definitions in CAS-2 and CAS-4 basically recognizes this principle in a more formalized and structured manner specifying the type of situations that can result in abnormal cost. Revenue is not contesting this principle. Neither is there any specific finding on the claim of the appellant that there was idle capacity during the relevant period. As seen from para 128 of the adjudication order 12/2012 dt 29-03-12 the ground taken by Revenu .....

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