TaxTMI 
TaxTMI 
2025 (5) TMI 1753
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.... that the value on which duty was paid was 110% of the cost of production, as certified by the Chartered Accountant; Department, however, entertained a view that the details of the cost of production as per CAS-4 Form were not produced and therefore the contention of the appellant was not acceptable. A series of show cause notices, covering the period November 2003 to October 2015, totally demanding duty of Rs 63, 21, 962, were issued; department adopted 110%, taking the value at which the appellant paid duty as the base price; Assistant Commissioner, vide impugned order, dated 13.01.2017, confirmed the demand, and imposed penalties. On an appeal preferred by the appellants, Commissioner (Appeals), vide impugned order, dated 29.12.2017, upheld the order of the lower authority. Hence, this Appeal No. E /60260/2018. 2. Shri T.R. Rustagi, Learned Counsel for the appellants submits that the Show cause notices demanding duty under rule 8 of the Valuation Rules are not sustainable in law; question which is central to the dispute involved in this Appeal, namely, whether Rule 8 of the Valuation Rules, 2000 is attracted in a case where the goods are partly consumed within the factory of pr....
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....ounsel submits also that that it is the department's case that the duty ought to have been paid on 110% of the cost of production, in terms of Rule 8 of the Valuation Rules, 2000; however, the department has not determined the "cost of production"; department has simply adopted the assessable value on which duty was paid by the appellant as the "cost of production", which has no legal basis; there is no provision in the Valuation Rules, 2000 to support this presumption; in the absence of actual determination of the cost of production as per CAS-4 method, the demand confirmed by the Assistant Commissioner and upheld by the Commissioner (Appeals) is patently illegal. Learned Counsel submits that once the demand confirmed is not legally sustainable, the penalty imposed cannot be justified; moreover, this being a case of interpretation of law, penalty cannot be imposed as held by Tribunal in many cases; as no specific clause of Rule 25 has been referred to in the show cause notice or in the orders passed, penalty cannot be imposed. 5. Learned Authorized Representative for the Revenue submits that as per Rule 8 of Central Excise Valuation Rules, it is very clear that the valuation of t....
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....he Authorized representative that 21 show cause notices were involved in this case, spanning the period from November 2003 to October 2015; however, all these notices were combined and adjudicated by a single order dated January 20, 2017, by the Assistant Commissioner; the impugned Order passed by the Original Authority is not sustainable in law, being violative of section 11A (11) of the Central Excise Act, 1944; the order passed by the Assistant Commissioner is contrary to the intent and purpose of subsection (11) of section 11A of the Central Excise Act, 1944; during the relevant period of notices issued, this subsection provides a limit of six months from the date of notice for notices issued within the normal period of limitation, and a limit of one year from the date of notice issued, invoking an extended period of limitation under Section 11A; it is only by the Finance Act, 2016, that in respect of notices involving an extended period of limitation, the limit for adjudication of the notice was extended to two years; there is no plausible reason, on the face of it, for the adjudication of a show cause notice issued in 2005 in the year 2017; the same applies to all other notic....
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....him or on his behalf in the production or manufacture of other articles, the value shall be one hundred and ten per cent of the cost of production or manufacture of such goods." w.e.f. 22nd November 2013 8. Where whole or part of the excisable goods are not sold by the assessee but are used for consumption by him or on his behalf in the production or manufacture of other articles, the value of such goods that are consumed shall be one hundred and ten per cent of the cost of production or manufacture of such goods. 12. A perusal of the provisions of Rule 8 as above, gives clear understanding that the said Rule covers only cases where the assessee clears entire production for captive consumption and there are no clearances outside the factory. In the instant case, the fact that the appellant clears partly for home consumption and partly to their sister concern at Agartala, is not denied. Therefore, we find that the case of the appellant is not covered by the un-amended Rule 8 till 22-11-2013. We find that Tribunal in the case of M/s. Indian Oil Corporation Limited 2023 (5) TMI 436 - CESTAT Kolkata, held that 8. We find that Valuation is to be done as per Rule 8 of the Valuation ....
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....2003-CX./ dated 13-2-2003 had directed to determine the cost of production for the purpose of Rule 8 of the Valuation Rules, 2000 by adopting CAS-4 standard developed by ICWAI. Thus, there is no dispute that the cost of production of the goods, in question, has to be determined under CAS-4. However, according to the Noticee, the costing has been done by loading 10% to the cost of production of the perfumery compound. They have also a submitted certificates of the Chartered Accountant to this effect. On going through the various certificates Accountant regarding cost of production of the products, in question, I find that the same are not in the CAS-4 format and accordingly it cannot be said as to whether the costing had been done in terms of CAS-4 costing standard or not. Loading of a percentage of the cost of production (mandated by Rule 8 of the Valuation Rules) is clearly not a requirement of CAS-4. The cost of production must therefore be computed strictly and invariably only under CAS-4. Moreover, the appropriate expert to certify the costing of the product is the Cost and Works Accountant and not the Chartered Accountant. Therefore, in my view, the certificate of the Chartere....