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2016 (9) TMI 1175 - CESTAT NEW DELHI

2016 (9) TMI 1175 - CESTAT NEW DELHI - 2017 (345) E.L.T. 139 (Tri. - Del.) - Valuation - captive consumption - Frequency or periodicity of costing in terms of CAS-4 - whether the CAS 4 based costing of Iron Ore Concentrate is to be done on an annual basis or for a lesser durations of 2/4/5 months, as and when the raw material costs varied - no sale of iron ore concentrate by the appellant - clearance to sister unit for further use is subjected to excise duty and valuation for such duty has to be .....

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hen there are changes in raw material cost. That being the case, we find that the reliance placed by the appellant on the principle that time of removal is relevant and, hence, annual costing is not tenable, is unsustainable. The fact remains that while the duty liability has to be discharged at the time of removal of excisable goods in a situation where there is no sale transaction and known value, the deemed transaction value has to be constructed based on costing method which necessarily will .....

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in terms of Rule 8 of Valuation Rules final determination of duty liability has to be made. In the present case, admittedly no provisional assessment was resorted to by the appellant. Hence, the determination of actual cost much later on the clearance resulted in certain adjustments and payments by the appellant. - Para 8 of guidelines issued by the Institute of Cost & Works Accountants of India on CAS-4 deals with periodicity of CAS-4 Certificates. On perusal of the guidelines by the ICAI, .....

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uty determination on the inter-unit transfer is made on annual costing. As such when the Department arrived at cost on annual average basis the duty liability, excess or shortage has also to be determined on such basis. It is not tenable while for arriving at per unit duty liability the whole year data is considered for costing, for total duty liability only months when short payment was noticed were considered. In other words when CAS-4 based annual costing formed basis for arriving transaction .....

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efund considered here. The point that the duty paid in excess in certain months has been availed as credit by sister unit hence, cannot be adjusted towards short payment also not tenable. The demand arose based on annual costing. Such cost price in terms of Rule 8 will apply to all clearances made during the relevant year. Admittedly, duty already discharged has to considered for arriving at overall short payment. Selectively applying the said cost price only for months when the clearances were .....

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ime bar requires closer scrutiny. Since we intend to remand the case to the Original Authority on the quantification of duty demand, this aspect also has to considered by the Original Authority for a clear finding. - Appeal partly allowed by way of remand - Excise Appeal No. 58701 of 2013 - Final Order No. 53790/2016 - Dated:- 27-9-2016 - Dr. Satish Chandra, President And Shri B. Ravichandran, Member (Technical) Shri Vipin Kumar Jain, Advocate for the appellant Shri R.K. Manjhi, Authorized Rep .....

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entrate is discharged in terms of Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, considering the use for captive consumption. These are admitted facts and are not in dispute. The dispute is only with reference to periodicity of costing to be followed while arriving at value in term of Rule 8 as above. In other words, whether the CAS 4 based costing of Iron Ore Concentrate is to be done on an annual basis or for a lesser durations of 2/4/5 months, as a .....

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to demand and recover duty of ₹ 27,07,44,044/- on this ground. The Original Authority adjudicated the case by confirming duty and imposing equal amount of penalty in terms of Section 11AC of the Central Excise Act, 1944. The present appeal is against this order. 3. The learned Counsel for the appellant submitted that the demand is not legally sustainable on various grounds. The main points raised are : (a) the original authority erred in adopting average cost of production during the Finan .....

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i III reported in 2015 (323) E.L.T. 227 (S.C.) held that the assessable value of manufactured goods are to determined at the time of removal. Further events or factors that are unknown to an assessee at the time of removal of goods are irrelevant for determination assessable value. (c) the reliance placed on Board s Circular dated 30/10/1996 is not at all relevant. The said circular dealt with addition of previous year s profit margin to arrive at valuation in terms of erstwhile Valuation Rules. .....

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e to these revisions by NDMC. Every time there was a revision, the appellant intimated the department about the revised cost alongwith CAS-4 certificate. (f) even if the Revenue intends to adopt average cost method, the demand cannot be made on selective basis, ignoring the months when there were actually excess payments. If the value has to be determined on annual cost calculation the duty payments for the whole period have to be considered for correct quantification. (g) the demand is clearly .....

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eard both the sides and perused appeal records including written submission. The admitted facts of the case are that there is no sale of iron ore concentrate by the appellant and clearance to sister unit for further use is subjected to excise duty and valuation for such duty has to be worked out in terms of Rule 8 of Valuation Rules, 2000. The central point of dispute is the frequency or periodicity of costing in terms of CAS-4. The appellants followed different value during the same financial y .....

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ntral Excise Rules, the duty liability based on self-assessment has to be discharged at the time of removal of goods when the invoices are prepared. The legal position as submitted by the appellant cannot be contested. However, it is an admitted fact that the appellants themselves did not follow costing to arrive at deemed transaction value for each clearance. They have considered a period of many months and worked out the costing, in terms of CAS-4 for that period and paid duty. Thereafter, the .....

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d which necessarily will involve an averaging of cost for a period, considering all the parameters. It is neither the case of the appellant nor there is such an approved standard for arriving at cost of excisable goods for each individual clearance. 7. Now, the question remains when at the time of each clearance of excisable goods for captive consumption the exact transaction value could not be arrived at the relevant time the duty has to be paid on a provisional basis and upon arriving at the c .....

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me. Para 8 deals with periodicity of CAS-4 Certificates. The guidelines states that the frequency of revising the certificate of cost of production will depend upon the significance in the changes in the cost due to various factors like input cost fluctuations, changes in the employee cost and other expenses. It further notes that where goods are cleared on cost of production worked out as per the audited accounts of the previous audited period, it is advisable to prepare a fresh certificate of .....

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ermined should be actual cost reconciled with the audited accounts of the company after the accounts for the period is audited. 9. On perusal of the guidelines by the ICAI, we find while arriving at costing based on CAS-4 the correct method will be to determine the same based on actual audited data as per the account year of the company. To that extend we find the CAS-4 cost price arrived at on annual basis by the Revenue is correct procedure. 10. The next issue for decision is on the quantifica .....

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ere considered. In other words when CAS-4 based annual costing formed basis for arriving transaction value, the overall duty liability/short payment should be arrived at after considering duty already paid during that year on such goods. We find the reasoning given by the Original Authority against adjustment of already paid duty as untenable. Section 11B has no application in such situation, when the appellants duty liability is determined on annual CAS-4, the duty already paid during said peri .....

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