TaxTMI 
TaxTMI 
2023 (6) TMI 456
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.... containing around 10% moisture content. In respect of nylon chips captively consumed for manufacture of nylon yarns at its manufacturing unit at Rajashree Nagar and nylon chips cleared to its sister units, the appellant discharges excise duty on the value determined under Section 4(1)(b) of Central Excise Act, 1944 read with Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 and CBEC Circular No. 354/81/2000-TRU dated 30-06-2000 and No. 692/8/2003-CX dated 13-02-2003. In terms of Rule 8 of the Valuation Rules, in case the excisable goods are not sold by the assessee but are used for consumption by him in the production or manufacture of other articles, the value shall be one hundred and ten per cent of the cost of production of such goods. Further, as per CBEC's Circular No. 692/08/2003 (supra), the cost of production of captively consumed goods shall be determined in accordance with CAS-4. For the period from 2007-08 to 2010-11, the appellant discharged excise duty claiming 9.5% discount from per unit cost of production of nylon chips & Pet Chips determined in CAS - 4 issued by Cost Accountant towards the weight of moisture contained in....
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....sture content in the wet chips cleared from the factory was 9.32% and 9.4 % respectively of the gross weight of wet chips. The Ld. Adjudicating authority however did not get convinced with the submissions made by the appellant and confirmed the demand of Rs. 92,28,179/- against the appellant under extended period of limitation & imposing equal penalty under Section 11AC of the Act and also demanding applicable interest as per Section 11AA/11AB of the Act holding that the appellant had failed to clear the excisable goods in terms of the CAS-4 certificates. The relevant extract from the adjudication order is as under: - "16. It is observed that the assessee cleared nylon / polyester chips to their sister concern units. As per the cost accounting standard- 4 (CAS-4) certificate issued by the company's cost accountant, the value for nylon chips was Rs. 116.79 per kg and Rs. 126.09 per kg for the year 2007-08 and 2008-09. For polyester chips, CAS-4 value was Rs. 53.71 per kg and Rs. 54.24 per kg for 2007-08 and 2008-09 respectively. However, the assessee had made a deduction of 9.5% from CAS-4 value on the ground that the goods cleared by them were wet chips whereas the CAS....
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....ficates has to be adopted to arrive at the value of captive consumption. Hon'ble courts have in catena of judgments have held that the CAS-4 certificates have to be followed unless a patent inaccuracy or error is shown." 2.3 Ld. Counsel for the appellant has vehemently pleaded before us that the deduction of 9.5% was correctly claimed from CAS-4 cost of production which were for the dry Nylon & polyester chips to arrive at the per unit cost of production of the wet chips. He has claimed that the impugned order fails to take into account the evidences submitted by the Appellant in reply to Show Cause Notice i.e. a Certificate dated 30.07.2010 issued by its HOD (QC), certifying the moisture content in RP extracted chips, Copy of independent cost accountant certificate dated 23.04.2012 & Copy of chartered engineer report dated 10.05.2012 who after physical verification certified that the moisture content after the centrifugal stage was in the Range of 9-13%. He further pleaded that the CAS-4 statement for the years 2009-10 &2010-11 itself arrives at the value after deducting the moisture content. The Appellant has not made any deductions on its own in the value mentioned in the CAS....
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....ion of extended period of limitation is unwarranted in the present case. that clearances made to sister concerns were duly reported in the relevant ER-I returns and there was no suppression as there is no column in the ER-I returns where deduction on account of moisture content could have been reported;that there was no incentive for it to deliberately suppress the value of clearances made to sister units since whatever central excise duty was paid was available to its sister units as Cenvat credit, therefore, the situation is revenue neutral. He relied on the decision of the Tribunal in the case Of Mahindra and Mahindra Ltd Vs Commissioner of Central Excise Mumbai, 2019 (368) ELT 105 (Tri-Mumbai) wherein the Tribunal held that on clearances to sister units when Cenvat credit is admissible to sister units, situation would be revenue neutral and hence extended period of limitation is not invokeable in such cases which was affirmed by the Hon'ble Supreme Court as reported in Commissioner v. Mahindra & Mahindra Ltd. 2019 (368) E.L.T. A41 (S.C.). 3. Ld. Departmental representative has vehemently argued that the impugned order was correctly passed and reiterated the findings of the i....
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.... records of M/s Rajashree Polyfil (A unit of Century Enka Limited) having its plant at Rajashree Nagar, Post Umalla Dist. - Bharuch for the financial year 2007-08 (1st April, 2007 to 31st March, 2008) to verify cost as given in the attached CAS-4 and moisture contents in the wet chips a previous step output in the manufacturing process to produce dry chips. We certify that the cost shown in the attached CAS-4 represents cost of dry chips and average moisture content in the wet chips from which the dry chips are produced, was 9.32% of gross weight of wet chips during the financial year 2007-08. The cost figures given in the attached CAS-4 and the content of moisture in the wet chips for the financial year 2007-08 are true and fair and are additionally based on our checking of the cost audit report and laboratory report on our visit to the company's plant on 18th April'2012." The above certificate clearly states that the certificate has been issued by the Cost Accountant after checking cost records, excise records, production records and other related records of the appellant. It is a settled principle of law that the certificates issued by qualified prof....