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2016 (3) TMI 344 - CESTAT ALLAHABAD

2016 (3) TMI 344 - CESTAT ALLAHABAD - 2016 (335) E.L.T. 376 (Tri. - All.) - Intermediate goods - captive consumption - Valuation adopted in terms of Rules and CAS-4 standards - eligibility for exemption under Notification NO.67/95-CE dated 16.03.1995 - capital goods - Held that:- Hard copy shim is an excisable product manufactured and fully put to captive use by the appellant. For arriving at the value for Central Excise purpose, the appellant followed provisions of Rule 8 and general principles .....

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of accounting/costing. The best judgement under Rule 11 of Valuation Rules does not permit such arbitrariness and imaginative valuation. - The impugned goods are admittedly "capital goods" falling under Chapter 84 of CETA. The provisions of exemption Notification NO.67/95-CE dated 16.03.1995 is clearly applicable to the impugned goods as they are used captively within the factory of production. The exclusion provided in the proviso of the said notification shall apply only to inputs not capi .....

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exemption under Notification NO.67/95-CE dated 16.03.1995. Here, we find that the ld.Commissioner's finding is absolutely without basis and is erroneous. - This we hold that the appellant will succeed on both the grounds viz.: valuation adopted in terms of Rules and CAS-4 standards and eligibility for exemption under Notification NO.67/95-CE dated 16.03.1995. - Decided in favour of assessee - MA (EH)-51530 And 70090/2015 And Ex Appeal Nos. 50263/15 And 55882/2014 - Final Order Nos. A/70122 .....

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tral Excise duty. They are availing cenvat credit on various inputs, capital goods arid input services. Proceedings were initiated against the appellant for demanding differential duty on captively consumed "hard copy shim" used in the manufacture of exempted final product hologram. Revenue felt that the valuation of the said shim was not proper under Rule 8 of Central Excise Valuation Rules, 2000. The main thrust of allegation by Revenue is that shim manufactured and consumed captivel .....

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alue of the impugned goods by applying principles under Rule 11 of Central Excise Valuation Rules, 2000. The Revenue evolved a formula as: Value of shim = value of holograms (-) value of stamping foil and release paper. The manufacturing, selling and other related expenses attributable to the sale value of holograms and depreciation of fixed assets were allowed as deductions. 2. The show-cause cum demands were adjudicated by the original authority confirming the demands and imposing equal penalt .....

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printing area of 150 mm x 150 mm, whereas soft shim has a printing area of 1205 mm x 305 mm and is more than twice in thickness and 16 times in area. They never sold hard copy shim during relevant period; (b) Hard copy shim is classifiable under CTH 84425010. These are manufactured and captively consumed in the manufacture of exempted holograms. Rule 8 of Valuation Rules is clearly attracted in such situation. The costing has been done as per CAS-4 standards. The mind/expertise/technology have .....

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copy shim falling under Chapter 84 is indisputably a "capital goods" manufactured by them for captive use. The proviso to the said Notification is applicable only to "inputs" as a bar for exemption in the case of use for exempted final products. The ld.Counsel also submitted copies of various case laws in support of his above contentions. These are examined later in the discussion. 4. The ld.A.R., Shri M. K. Sarangi, reiterated the findings in the impugned order. He submitte .....

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t are correct in following Rule 8 and CAS-4 standard to arrive at the value of captively consumed hard copy shim and (b) eligibility of the appellant for exemption under Notification No.67/95-CE dated 16.03.1995 for captively consumed hard copy shim as capital goods. On the first point, we find that hard copy shim is an excisable product manufactured and fully put to captive use by the appellant. For arriving at the value for Central Excise purpose, the appellant followed provisions of Rule 8 an .....

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e Revenue did not initiate action independently to ascertain by another Cost Accountant whether the CAS-4 calculation by appellant is correct or not; (d) The additional cost of "mind/technology" is not to be presumed and imported as a concept outside the perimeters of Valuation Rules and costing standards; (e) There are no allegation or evidence that the manufacture of hard copy shim will involve additional cost not reflected in the books of accounts. Apart from the above, we find that .....

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d. In Steel Complex Case: 2004 (171) ELT 255 (Tri.-Bang.), the Tribunal held that Rule 8 would be unreliable in case the manufacturer is incurring huge losses. The ratio of this decision will not support the view that in present case because of huge profit, the CAS-4 standard should be discarded. It will result in a situation that the percentage of profit earned on final product will be added to the cost of intermediate product also. No legal sanction is available for such preposition. 6. We fin .....

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