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TMI Blog2018 (5) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... lifts at the customers site, the value is required to be determined as 110% of the cost of production in terms of Rule 8 of Valuation Rules, 2000 read with Section 4 (1) (b) of the Central Excise Act, 1944. The appellants could not arrive at the actual cost of production at the time of clearance of the manufactured parts and components for want of ascertaining of overhead charges and hence requested for provisional assessment. The said request was allowed and for payment of Central Excise duty the provisional value was determined by the appellants on the cost of input materials plus labour charges and 10% overhead charges of the preceding financial year. They were availing the facility of Cenvat credit of duty paid on inputs, capital goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d according to the specific requirement of the order in the factory site of the appellants. This results in left over parts treated as remnant parts. These balance remnant steel sheets/cut outs cannot be utilized for further consumption as these are incompatible dimensions. The percentage of remnant parts would vary from 10 to 15% of specific sheet metal issued depending upon the requirement of the appellant's projects at a given time. In some cases, this percentage will exceed 15% also. Consequently, in the course of provisional assessment during the disputed period, for the purpose of calculating material consumption, the appellants considered the value of wastages so cleared as wastes and scrap and duty paid on such waste and scrap on tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost of materials consumed and deducting the value of wastes and scrap. 5. Heard both sides. 6.1 The main contention put forward by the Ld. Counsel is that the gross value of the remnant parts after cutting the required dimensions from the steel sheets ought to be deducted for arriving the cost of production. It is seen from the impugned order that the Cost Auditor has taken the entire value of the raw materials consumed as laid down by CAS-4 and has reduced the actual sale value of wastes/ remnant. The Commissioner in the impugned order has discussed the issue in para-10 which is as under:- "10. Firstly, I proceed to address the objection of the assessee pertaining to the methodology adopted by the Auditor for arriving at the cost of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stment for stock of work-in-process, finished goods, recoveries for sales of scrap, wastage etc. shall be made. "
When the appellants have availed Cenvat credit on the entire input/raw materials consumed, their contention that the value of that part of the raw material which remains as remnant parts from the steel sheet has to be deducted cannot be accepted. The Cost Auditor has deducted the value of the scrap recovered. Therefore we do not find any grounds to interfere with the impugned order. The contentions of the appellant are without any legal basis. We therefore find no ground to interfere with the impugned order. The appeals are dismissed.
( Order pronounced in the open Court on 10.04.2018 ) X X X X Extracts X X X X X X X X Extracts X X X X
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