2017 (1) TMI 1457

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....ral (Audit), two objections were made:- (i) While making clearances of final products to their sister concern, the assessee was alleged to be not loading the profit element and the demand amounting to Rs. 2,18,50,490/- was raised on this ground. (ii) The assessee was not including the cost of packing materials in the assessable value of sponge iron which was captively consumed in the manufacture of their finished products. These finished products were in turn, further captively consumed for the manufacture of final products. Excise duty to the tune of Rs. 3,22,79,542/- was demanded for the alleged non-inclusion of cost of packing materials. Ld. Commissioner vide the impugned order dated 30.11.2010 dismissed all charges and vacated the ....

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....e Act, the value of the goods shall be the normal transaction value at which these are sold by the related person at the time of removal, to buyers (not being related person); or where such goods are not sold to such buyers, to buyers (being related person), who sells such goods in retail : Provided that in a case where the related person does not sell the goods but uses or consumes such goods in the production or manufacture of articles, the value shall be determined in the manner specified in rule 8. 7.2 I find that the CBEC in Para 5 of its Circular No. 643/34/2002-CX dated 01.07.2000 has clarified as under:- Point of doubt No. 5. - How will valuation be done in cases of captive consumption (i.e. consumed within the same factory....

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.... 30.06.2000, wherein how to arrive at the value has been explained in Para 21. This was further clarified vide circular No. 692/8/2003-CX dated 13.02.2003 to work out the cost of production for captive consumption in accordance with CAS-4. Therefore, the objection raised by audit is not correct as the goods were consumed under Notification No. 67/95-CE dated 16.03.1995 and in these cases value of goods cannot be determined under Rule 8 of the Central Excise Valuation (Determination of Price of Excisable goods) Rules, 2000." 4. The second issue for consideration is whether the assessee has failed to include the cost of packing materials in respect of Sponge iron captively consumed. The ld. Commissioner in the impugned order has discussed t....