TaxTMI 
TaxTMI 
TaxTMI 
2025 (5) TMI 1909
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.....2009, demanding the inadmissible self-credit of Rs.94,21,396/- and Rs.01,43,33,205/- respectively, for the period April 2008-May 2008 and June 2008- March 2009, allegedly availed by the appellants, were issued to the appellants. The issue involved in the show cause notice dated 05.05.2009 was that the appellants have not availed the total CENVAT credit available to them before paying through cash/ PLA; accordingly, not only payment of Rs. 94,21,396/- was incorrect but also availment of self-credit of the same was irregular. The issue involved in the show cause notice dated 03.07.2009 that the appellants have taken credit of entire duty paid through account current and not on the value addition of 56%. Both the show cause notices have been decided by the Commissioner of Central Excise, Jammu vide Order dated 12.05.2010 confirming the total demand of Rs.32,31,759/- along with interest in respect of show cause notice dated 05.05.2009 and Rs.35,02,958/- along with interest in respect of show cause notice dated 03.07.2009. Learned Commissioner also imposed equal penalty of Rs.35,02,958/- in respect of show cause notice dated 03.07.2009 and a penalty of Rs.5000/- under Rule 27. 3. Shri....
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.... from total consumption, which would give the fair justice to value addition. 6. Learned Counsel submits also that the respondent has deducted Octroi, Transportation & Collie, Carriage Inward; Notification does not envisage such deduction, as these are expenses and charged off to revenue and not specifically mentioned in the notification as qualifying for deduction. He submits that the respondent has included the work in process in calculating the rate fixation; notification speaks about the goods available as inventory in the unit but not cleared at the start /end of the Financial Year; it is very clear that in order to be inventory for the addition/ deduction from the sale value, the goods must be physically available in the unit & the same should not have been duty paid; this can be deduced from the fact that the notification uses the word 'Not Cleared'. He submits that in view of the above, the appeal may be allowed. 6.1. In respect of Appeal No. E/2902/2010, learned Counsel for the appellants submits that there are two issues involved in the two show cause notices issued. The demand of duty of Rs. 32,31,759/- was on the count that the appellants have not exhausted the availa....
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....cial Records of the preceding financial year and that the manufacturer supports his claim for Special Rate with a certificate from his Statutory Auditor, based on the Audited Balance Sheet and Financial Records of the unit, for the preceding financial year. whether the appellant is paying duty under MRP based assessment is of no consequence in the present case. He submits that the appellant has not included value of work in process (WIP) while Commissioner has given reasoned and rational findings and has concluded that the value of WIP was to be included while arriving at 'Value of said goods available as inventory', as per Accounting Standards prescribed by the Ministry of Company affairs; from the provisions of Notification No. 56/2002-CE dated 14.11.2002 as amended read with the provisions of Sub-Sections 3A and 3C of Section 211 of Companies Act, 1956, Balance Sheet and Profit & Loss Account has to be considered and as such Accounting Standards prescribed by the Ministry of Company Affairs are squarely applicable to calculate the actual value addition. 9. Learned Authorized Representative submits on the reliance of the appellants the judgement of Hon'ble High Court....
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....ed 27-3-2008. We find that the relevant Para 2.1 of Notification No. 19/2008-CE NT dated 27-3-2008 is as under 2.1 (1) Notwithstanding anything contained in paragraph 2, the manufacturer shall have the option not to avail the rates specified in the said Table and apply to the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be, having jurisdiction over the manufacturing unit of the manufacturer for fixation of a special rate representing the actual value addition in respect of any goods manufactured and cleared under this notification, if the manufacturer finds that four- fifths of the ratio of actual value addition in the production or manufacture of the said goods to the value of the said goods, is more than the rate specified in the said Table expressed as a percentage. For the said purpose, the manufacturer may, within sixty days from the beginning of a financial year, make an application in writing to the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be, for determination of such special rate, stating all relevant facts including the proportion in which the materi....
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....al year, taking into account the following. (i) Sale value of the said goods excluding excise duty, Value Added Tax and other indirect taxes, if any, paid on the goods; (ii) Less Cost of raw materials and packing material consumed in the said goods; (iii) Less Cost of fuel consumed if eligible for input credit under CENVAT Credit Rules, 2004; (iv) Plus: Value of said goods available as inventory in the unit but not cleared, at the end of the financial year, (v) Less Value of said goods available as inventory in the unit but not cleared, at the end of the financial year preceding that under consideration. Special rate would be the ratio of actual value addition in the production or manufacture of the said goods to the sale value of the said goods excluding excise duty, Value Added Tax and other indirect taxes, if any, paid on the goods. 11. We find that dispute between the appellant and Revenue appears to be on the following issues. (i). While Considering the Value of Sales, whether the value shown in financial records be taken or the value under Section 4A less abatement be taken. (ii). Whether Excise duty and Cess should be excluded or included in the sales figure....
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....lected in profit & Loss account. We find that the notification uses the word 'sales', which in common man parlance, means trading for a consideration, though there may be a profit or otherwise. Free distribution of samples cannot be held to be sales. In fact, samples bear an indication to the effect that they are 'not for sale'. This is not to deny the fact that they constitute certain 'cost' to the manufacturer. The notification wishes to benefit the manufacturers who achieve a value addition and the value addition is invariably achieved by sales and not by free distribution. When the notification speaks of sales, it means sale only but not free distribution. When it says 'value', it is the value but not 'notional value or proportionate value or 'pro rata value. Commissioner also finds that the appellant has not brought on record any document evidencing the actual sale of samples and thus fetching any sales realisation. Therefore, we find that as held by the adjudicating authority, inclusion of 'notional value' or 'pro rata value', is beyond the scope of the Notification No.56/2002-CE dated 1411.2002, as amended, for the purpose of calculation of value addition. 15. Regarding the....
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....I find that purchase should include all expenses directly attributable to the acquisition. I find that the Party in their letter dated 29.12.2009 clarified the nature of expenses under the heads Transport & Coolie, Octroi and Carriage inwards. As per the clarification given by the Party, the following expenses merit to be accounted for and added to the cost of raw material consumed. 17. Coming to the last issue as to whether the value of the inventory should include work in progress, we find that the adjudicating authority finds as follows. Inventory: The terms Inventory has been defined in Para-3 of the Accounting Standrad-2 win ich reads as follows: "3. The following terms are used in this Statement with the meanings specified: Inventories are assets: (a) held for sale in the ordinary course of business; (b) in the process of production for such sale; or (c) in the form of materials or supplies to be consumed in the production process or in the rendering of services. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale." From the clause 2 ....