2009 (4) TMI 631

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....of duty. The appellants had determined the value of the castings so cleared by cost construction method in terms of Rule 6(b)(ii) of the Central Excise Valuation Rules, 1975 (CVR). On scrutiny of the records of the appellants it was tentatively found by the authorities that for clearance of unmachined castings during September 1996 to February 1997 the appellants had not determined the value correctly and had followed a wrong method. A Show Cause Notice was issued on 3-4-1997 proposing to determine the value in accordance with the provisions of Rule 6(b)(ii) of the CVR and to recover an amount of Rs. 17,14,866/- which appeared to have been short-paid by the appellants. 2. Adjudicating the above Show Cause Notice the original authori....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... 4(b) 800                         As per the Assessee     Value Weight     (a) (b) 1 Cost of raw materials 10,000/- 1000 Kgs. 2 Cost of other raw materials/additives 5,000/- 200 Kgs. 3 Production expenditure (like wages, power, wear and tear, profit margin etc.) 1,000/-   4 Final product (i.e. good castings)*** ? 800 Kgs Value = 1(a)+2(a)+3(a)   10,000+5,000+1,000 = Rs. 13.30 per Kgs.     *** The assessee has included all the goods which is produced and not merely what is cleared by them to the sister concern to arrive at the u....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....learned SDR for the Revenue. 3. We have carefully considered the case records and the submissions by both sides. The issue involved is valuation of goods transferred to sister units under Rule 6(b)(ii) of CVR. The said rule provides that value of goods captively consumed can be determined based on the cost of production of such goods including profits, if any, the assessee would have normally earned on the sale of such goods. The ld. Counsel for the appellants argued that the cost of production of the castings has to be determined by working out the cost per unit of raw material from the total quantity of raw material consumed. He also argued that CAS-4 should be adopted to work out such cost of production. We find that the first ar....