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Tribunal: Excise duty & notional profit not part of yarn value. Precedent cited. No statutory basis for profit. The Tribunal ruled that excise duty paid on single yarn and 10% notional profit should not be included in the value of double or multi-fold yarn. Citing a ...
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Tribunal: Excise duty & notional profit not part of yarn value. Precedent cited. No statutory basis for profit.
The Tribunal ruled that excise duty paid on single yarn and 10% notional profit should not be included in the value of double or multi-fold yarn. Citing a Supreme Court precedent, it held that excise duty of input need not be added to the assessable value of the final product. The Tribunal also found no statutory basis for adding notional profit unless supported by the assessee's books of accounts. As the appellant was incurring losses, the 10% notional profit was deemed inapplicable. The lower authority's decision was overturned, and the matter was remanded for re-quantification if necessary.
Issues: Valuation of yarn - Inclusion of excise duty paid on single yarn and 10% notional profit in the value of double or multi-fold yarn.
In the present case, the dispute revolved around the valuation of yarn, specifically whether excise duty paid on single yarn and 10% notional profit should be included in the value of double or multi-fold yarn. The Revenue contended that both elements should be added to the assessable value, as upheld by the learned Commissioner (Appeals).
Upon review, the Tribunal noted that the inclusion of excise duty suffered on the single yarn in the value of the double yarn was settled by the Hon'ble Supreme Court in the case of Dai Ichi Karkaria Ltd. The Court held that excise duty of input is not required to be added in the assessable value of the final product on a cost construction basis. Additionally, the Tribunal found that there was no statutory provision to include a fixed amount of notional profit in the value of captively consumed goods. Notional profit could only be added if there was a profit as per the assessee's books of accounts. In this case, it was established that the appellant was incurring losses based on the cost auditor's report, thus precluding the addition of 10% notional profit in the value of the double yarn.
Consequently, the Tribunal disagreed with the lower authority's decision and ruled that neither excise duty paid on the single yarn nor 10% notional profit should be included in the value of the double yarn. As a result, the impugned order was set aside, and the matter was remanded back to the original authority for re-quantification of any demand, if necessary, in light of the Tribunal's observations. The appeal was allowed by way of remand to the original authority.
The judgment was pronounced in court on 1-12-2016 by Shri Ramesh Nair, Member (J), and C.J. Mathew, Member (T).
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