TaxTMI 
TaxTMI 
2004 (7) TMI 170
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....prices as calculated from cost sheets and are discharging duty liability. On scrutiny of cost sheet it was noticed that the appellants are not taking into consideration the "other works overhead" element in arriving at the assessable value though it forms part of the costing element of 'conversion cost' shown in the costing report. The manufacturing over head is nothing but indirect cost incurred for operating production division of a factory. It includes ordinary costs incurred from the stage of procurement of raw materials till the completion of the finished products. Cost audit report procured by job work project reflects expenses on different elements of costing. On enquiry it was found that P&G provided manufacturing technology in the form of manuals and also engaged certain technical persons from their offices to monitor day-to-day production activities and quality control standards. One person from P&G office continuously monitors products. P&G pays conversion charges which includes manufacturing profit of appellants. The appellants have entered into agreement with P&G on 1-12-94 and the agreement contains the details of processing charges, yield, loss ratio, quality control....
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....sable value. It was found that the appellants had not taken into consideration, the "other works overheads" of the cost audit report for arriving at the assessable value from the costing reports for the years 96-97 to 2000-01 and after taking this into account they have short paid the duty of Rs. 45,50,625.56. Therefore show cause notice was issued to them demanding this differential duty on 'other works overheads' which is required to be added in the assessable value as per the cost audit report of M/s. P&G. The Commissioner under the impugned order held that the appellants have not made any specific submission with regard to non-inclusion of other overhead cost mentioned in the costing report in the assessable value of the goods manufactured. Since these costs relate to the raw-materials, packing materials and finished goods these form part of cost of production. He confirmed differential duty of Rs. 28,15,489/- under Section 11A and observed that amount of Rs. 8,37,847/- Rs. 94,682/- and Rs. 8,02,608/- were already paid by the appellants towards the differential duty on account of cost variations and confirmed the same. He imposed a penalty of Rs 27,45,561/- on the appellants un....
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.... Commissioner has applied proviso to Section 11A for demanding duty and imposition of penalty under Section 11AC. She stated that the appellant had received a copy of cost audit report for the year 98-99 and 99-2000 on 21-6-2000 only. By taking average cost of raw-material, packing materials from the cost audit report for the aforesaid period the appellants have calculated differential duty for the period from 98-99, to 2000-01 and accordingly, paid the differential duty of Rs. 8,02,608/- and intimated the department under their letter dated 5-1-2002. Earlier the appellant had themselves calculated the differential duty of Rs. 7,32,492/- for the years 95-96 to 97-98 on the basis of average cost of raw-material/packing material and paid the differential duty on 21-3-99. The appellants pleaded that they had incurred certain additional expenses like handling charges, testing charges and insurance charges in connection with manufacture of said goods. They paid the additional expenses incurred by them and paid excise duty of Rs. 94,681/- on 26-7-2000. Thus, they have paid total differential duty of Rs. 17,36,881/-. The appellants had filed particulars of declarations for the products ma....
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.....L.T. 493 (S.C.)] forms manufacturing expenses in accordance with costing principles. Such expenses are termed as manufacturing overhead and in the present case reflected as 'other works over head' in cost audit report which needs to be taken into consideration for arriving at the correct assessable value of products of P&G manufactured by the appellants. He relied on the decision of the Tribunal in support of his contention in the following cases - (i) CCE, Pune v. Shri Warana Sahakari Dudh Utpadak Prakriya Sangh Ltd. [2001 (131) E.L.T. 676 (T)] wherein it was held that part of salaries paid to persons and posted at the premises of job worker for supervising receipt and use of raw-material rent for the accommodation and expenses includible in assessable value at the hands of job worker, such expenses form cost of such material. Expenses for raw-material, cost of maintaining godown for storing raw-material for supplying to job worker includible in assessable value of goods by job worker as it goes into the cost of raw-material. (ii) M/s. Mysore Rolling Mills Pvt. Ltd. v. CCE, Belgaum [1987 (28) E.L.T. 50 (S.C.) wherein it was ....