CAS-4 cost redetermination required where engine valuation was provisional and refund figures were not properly supported.

Refund entitlement in valuation of automotive IC engines depended on a proper redetermination of cost where the assessment was provisional and the engine cost was not ascertainable at the relevant time. The claimant relied on a cost audit report based on CAS-4, but the authorities rejected the figure through broad observations and by changing the method for computing normal production without giving adequate particulars for the revised cost. The correct course was to recompute the cost afresh under CAS-4 on the basis of relevant details furnished by the parties. The impugned order was set aside and the matter was remanded to the original adjudicating authority for fresh determination of cost and refund entitlement.

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Issues: Whether the refund claim arising from valuation of automotive IC engines was correctly restricted by adopting a different cost basis, and whether the cost of production had to be redetermined under the applicable cost accounting standards.

Analysis: The assessment was provisional because the cost of the engines was not ascertainable at the relevant time. The appellant had supported its claim with a cost audit report prepared on the basis of CAS-4. The authorities below rejected the claimed figure by making broad observations and by altering the method used for computing normal production, without furnishing adequate particulars for the revised cost. The proper course, in these circumstances, was to redetermine the cost of the engines afresh in accordance with the principles of CAS-4, with the parties and the adjudicating authority working out the correct figures on the basis of relevant details.

Conclusion: The impugned order was set aside and the matter was remanded to the original adjudicating authority for fresh determination of cost and refund entitlement.

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