Appellate authority overturns order on notional profit, remands case for accurate assessment.

The appellate authority set aside the Commissioner(Appeals)'s order adding a notional profit of 10% to the assessable value of yarn cleared for captive consumption, totaling Rs.77,72,869. The case was remanded to the original adjudicating authority to determine the notional profit based on the profit earned only by the textile division, excluding profits from other divisions of the factory. The Tribunal's decision emphasized that notional profit should be added to the cost of production, even if not actually earned, as per relevant precedents. The Stay Petition and appeal were disposed of accordingly.

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Issues:
Assessable value determination for captive consumption of yarn.

Detailed Analysis:
1. The issue in the present appeal pertains to the correct assessable value of various yarns cleared for captive consumption by the appellant. The original adjudicating authority dropped the duty demand against the appellant, stating that no notional profit should be added to enhance the assessable value due to the appellant's factory incurring losses. However, on appeal by the Revenue, the Commissioner(Appeals) added a notional profit of 10% based on the profit earned by the company in all units, confirming the duty demand of Rs.77,72,869. The appellant's advocate argued that profit and losses of a particular unit should be considered for adding notional profit, citing relevant precedents like Standard Industries Ltd. Vs. CCE Bhopal and the Supreme Court judgment in CCE Aurangabad Vs. Raymonds Ltd.

2. Referring to the case of CCE Indore Vs. Standard Industries Ltd., it was established that only the notional profit earned by the textile division should be considered, not profits from other divisions of the same factory. Even if no actual profit was earned, the profit that would have been earned should be taken into account. Consequently, the matter was remanded to the lower authority for the appellant to prove that the notional profit should be less than 10%.

3. The lower appellate authority relied on the Tribunal's Larger Bench decision in the case of Raymonds Ltd. v. Commissioner of Central Excise, Aurangabad and Crompton Greaves Ltd. v. Commissioner of Central Excise, Chandigarh, stating that the profit from the chemical division should not be included in determining the cost of captively consumed yarn. The Tribunal's decision emphasized that notional profit should be added to the cost of production, even if not actually earned, based on the Apex Court's judgment. As the Commissioner(Appeals) considered the profits and losses of the entire company, the order was deemed unsustainable. The case was remanded to the original adjudicating authority to determine the exact notional profit as per the Tribunal's precedent in the case of CCE Vs. Standard Industries.

4. The impugned order was set aside, and the matter was remanded for a fresh decision in line with the observations made in the Standard Industries case. The Stay Petition and appeal were disposed of accordingly.

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