TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Appeal granted: Interest on loans excluded from production cost for duty calculation</h1> <h3>SWARAJ FOUNDRY DIVISION Versus COMMISSIONER OF C. EX., LUDHIANA</h3> SWARAJ FOUNDRY DIVISION Versus COMMISSIONER OF C. EX., LUDHIANA - 2012 (284) E.L.T. 689 (Tri. - Del.) Issues:Interpretation of Central Excise (Valuation) Rules regarding inclusion of interest on loans in the cost of production for duty calculation.Analysis:The appellant manufactured castings of iron and steel for motor vehicle parts, clearing them to another unit for captive consumption based on 115% of the cost of production under Rule 8 of Central Excise (Valuation) Rules. The department demanded duty, including interest on loans in the cost, leading to a dispute. The Commissioner confirmed the duty demand and imposed a penalty, prompting the appeal.The appellant argued that interest on loans should not be part of the cost, citing Accounting Standard CAS-4 and a Board Circular on costing for captive use. The department contended that the Circular had prospective validity, relying on a Supreme Court judgment. The Tribunal analyzed the issue, focusing on the Circular's applicability and the principles of costing under CAS-4.The Tribunal referred to the Supreme Court's ruling on determining production cost strictly as per costing principles, specifically CAS-4, even for periods predating relevant Circulars. It emphasized that only direct production costs should be included, as per established accounting principles and ICWAI standards. Recognizing the Circular's alignment with CAS-4, the Tribunal set aside the duty demand, ruling in favor of the appellant based on the Supreme Court's precedent.In conclusion, the Tribunal allowed the appeal, overturning the duty demand decision that incorrectly included interest on loans in the cost of production. The judgment clarified the application of CAS-4 standards and the necessity to adhere to costing principles, irrespective of Circulars' prospective nature, in determining duty calculations under the Central Excise (Valuation) Rules.
TaxTMI 