2013 (4) TMI 29

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.... of production in accordance with the provisions of Rule 8 of the Central Excise (Valuation) Rules. The cost of the goods was determined in accordance with CAS-4. The department was of the view that the cost should also include the element of "interest on loans" and on this basis, duty demand was raised by the department by issuing show cause notice. The show cause notice was adjudicated by the Commissioner vide order-in-original dated 21-2-2005 by which the Commissioner confirmed the duty demand of Rs. 34,38,979/- for the period from May, 2001 to September, 2001 along with interest. Besides this, he also imposed penalty of Rs. 5 Lakhs on the appellant. Against this order of the Commissioner, this appeal has been filed. 3. Heard both ....

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..... We have carefully considered the submissions from both the sides and perused the records. 7. Coming to the question of interest cost, in terms of the Board's Circular No. 6/29/2002-CX.-I, dated 13-2-2003, the cost of the goods cleared for captive consumption must be determined in accordance with the general principles of costing and accordingly for this purpose, CAS-4 Standard is to be adopted. As per CAS-4, for determining the cost of goods, the interest cost is not to be included. The department's plea, however, is that Circular dated 13-2-2003 of the Board has only prospective application and is not applicable for the period prior to 13-2-2003 for the purpose of determining the cost of production under Rule 6(b)(ii) of the C....

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....anufacture/production of these intermediates i.e. sum total of the direct labor cost, direct material cost, direct cost of manufacture and the factory overheads of the factory producing such intermediate products are included in the cost of production. The appellant produced along with the reply to the Show Cause Notice the following authoritative texts : Wheldon's Cost Accounting and Costing Methods, Cost Accounting methods by B.K. Bhar, Principles of Cost Accounting by N.K. Prasad, Glossary of Management Accounting Terms by ICWAI. 11. In C.C.E. v. Dai IchiKarkaria Ltd. (1999) 7 SCC 448, at page 459 it has been held that the normal principles of accountancy shall be applied to determine the cost. In this decision this Court observed ....