TaxTMI 
TaxTMI 
2018 (7) TMI 1519
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....the main aspect of such works is supply, Erection and Commissioning of 16/25/KVA. The rate quoted by the appellant is inclusive of material and also taxes and duties. Since the appellants are manufacturing the transformers, they have arrived at the cost of 16/25 KVA cleared after considering the deductions like Vat, Cost of Mounting Arrangement / Jumpering and profit at the rate of 10%. This information was given to the Revenue Authorities by a letter dated 10.04.2008. The authorities informed the appellant that the valuation adopted by them is in correct and directed them to adopt the correct value by deducting the tax actually paid and arrived at the value for discharge of Central Excise duty. Appellant also submitted that the data certified by the Chartered Accountants. The said explanation of discharge of the duty liability based upon the deductions, was not accepted in the show cause notice was issued demanding differential duty. The Adjudicating Authority after following due process of law, confirmed the demands raised along with interest and imposed penalties. The appeal filed before the First Appellate Authority was partially allowed and the penalties were set aside. 3. ....
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....e were price schedules in the agreement with APSPDCL and whether the cost of accessories under dispute to be included to the price of transformers or otherwise. 6. Both the lower authorities have confirmed the demand on the ground that appellant have adopted two types of valuation for the purpose of arriving at the price of transformers cleared to the site for execution of turnkey project and they have not fulfilled the conditions stipulated in the Central Excise for the goods as per transaction value. 7. The factual matrix of the case as recorded by First Appellate Authority is as under: "9. It is observed that in respect of the DTRs cleared during the months of March, 2008 to April, 2008, the appellants have adopted the basic values of Rs. 37,009.64 for 16 KVA and Rs. 48,581.44 for 25 KVA, arrived by them and quoted in the Contract agreement with APSPDCL. For the months of May, 2008 and June, 2008, they have adopted the basic values of Rs. 34,526.15 and Rs. 44,261.15 for 16 and 25 KVA DTRs respectively basing on the certification of the Chartered Accountant. However, it is noticed the appellants have collected the prices from APSPDCL basing on the prices quoted by them i....
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.... "5. On going through the records and documents, we find that in this case, the appellants when they received the order for implementation of turnkey projects had intimated the department and submitted the cost structure to the department. The assessable value of the transformers was determined as per CAS-4 by a qualified Chartered Accountant and this was submitted on 31-7-2004 to the officer in respect of his letter dated 22-4- 2004. Nevertheless, show cause notice was issued on 12-8-2005 invoking suppression and misdeclaration and proposing to revise the assessable value and demand of differential duty with interest and imposition of penalty as above. We find that what the department has done is to add the freight element from the factory gate to the sites in respect of transformers by invoking Rule 7 read with Rule 11 of the Central Excise Valuation Rules and also calculate the assessable value on the basis of transformer oil requirement indicated in the contract and adopt the one whichever is higher. There is no finding or evidence to show that actual quantum of oil used was higher than what was indicated in the CAS-4 and why the Chartered Accountant's certificate cannot be acc....
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....pplicable in terms of Section 4(1)(b) read with Central Excise Valuation Rules, 2000. If we go through the Valuation Rules sequentially, we find that in terms of Rule 11 most appropriately Rule 8 is applicable which prescribed the valuation of cost construction method at the rate of 115% of the cost of manufacturing. The respondent have valued the goods as per Rule 8, the computation of the value on the basis of Rule 8 was not disputed by the Revenue what is disputed is that only freight charges should be added in the value which was arrived at in terms of Rule 8. On a plain reading of Rule 8 it is clear that the value should be 115% of the cost of manufacture of the product. The provision does not provide to add any elements over and above the 115% of the cost of manufacture. Therefore addition of freight charges in the value of 115% is without authority of law. The Ld. Commissioner (Appeals) appreciated this legal position and given the following finding: "As per C.B.E. & C. Circular No. 692/8/2003-CX, dated 13-2-2003, the valuation of goods for captive consumption was to be done strictly in accordance with CAS-4 (Cost Accounting Standard 4) issued by ICWAI. The appellants hav....
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.....89 0.00 0.00 18235041.00 32915.24 8691383.00 40237.89 0.00 0.00 18235041.00 32915.24 8691383.00 40237.89 2637964.95. 20873005.95 31387.98 8691383.00 40237.89 4023.79 44261.68 3138.80 34526.78 I/We, have received above data on test check basis with reference to the books of account, cost accounting records and other records based on the information given to me/us, and the basas of generally accepted cost accounting practice followed by the industry. We certify that the above cost data reflact true and fair view of the cost of production. Seal & Signature of company's Authorised Representa M. No 23675 KADAPA Date 10.07.2009 Place: Kadapa RIERED ACCOUNT Document 2 RAGHAVENDRA INVOICE CUM CHALLAN INDUSTRIES Manufacturers of Power Distribution Transformers & Special Purpose Transformers 1183-2. MACHUPALLI ROAD UKY PALLE (POST). KADARA-516 002 Te 8661-248164 F 242023 R Fax 08562-277408. Cell 94402 81393 For removal of Excisable Goods from consumption / export (under Rule 11 of C. Ex. Rules 2002) Invoice No. C16 Date 28.04.08 Original for Buyer 016/RT. -.04.2008 ....