The assessee was removing goods manufactured in one factory to its other units\u00a0\u00a0 for captive consumption and was discharging the duty liability on the assessable value determined on the basis of cost of production as per Rules 6 (b)(ii) of the Central Excise (Valuation) Rules, 1975.<\/p>\n
\u00a0<\/p>\n
Whether the cost of production will be determined based on the actual cost of production at the factory of production alone or the costs of production in all the units of the assessee together will be taken into consideration?<\/p>\n
\u00a0<\/p>\n
The Court observed that it was common ground between the parties before the Tribunal that the cost of production under erstwhile Rule 6(b)(ii) of Central Excise (Valuation) Rules, 1975 will have to be determined based on the actual cost of production at the factory of production alone and not the costs of production in\u00a0\u00a0\u00a0 all the units of the assessee together. The Court referred to the judgment of CCE Pune v. Cadbury India Ltd. [JT 2006 (7) SC 147], <\/em><\/strong>which was decided on the principles of determining cost of production for captive consumption laid down\u00a0\u00a0 by the Institute of Cost and Works Accountants of India (ICWAI). The ICWAI formulated the standards for costing: CAS-4. According to CAS-4 the definition of \u201ccost of production\u201d is as: \u201cCost of Production shall consist of Material consumed, Direct wages and salaries, Direct expenses, Works overheads, Quality Control cost, Research and Development cost, Packing cost, Administrative Overheads relating to production.\u201d The cost accounting principles laid down by ICWAI have been recognized by the Central Board of Excise and Customs vide <\/em>Circular\u00a0 No. 692\/8\/2003, CX dated 13.2.2003.<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n The case was remanded to the Commissioner to be decided as per principles laid down in Cadbury\u2019s judgment. The assessee was to satisfy Revenue for less than 10% notional profit and short levy of excise duty to be calculated accordingly. Credit was allowed if any. (CA. Nos. 2086-2087 of 2002 dt. 12-10-2006)<\/p>\n Editorial<\/em><\/strong>: Rule 30 of the CGST Rules provides for the determination of \u2018value of supply of goods or services or both based on cost\u2019. This provision is substantially similar to Rule 8 of the Central Excise (Valuation) Rules, 2000, which in turn, was based on Rule 6(b)(ii) of the Valuation Rules of 1975. However, the rules would come into play only when section 15(1) does not apply. If rules were to apply, the value has to be determined in terms of Rule 27, 28 and 29, failing which; Rule 30 would come into operation. Consequently, principle laid down in the above ruling could be relied upon, though, according to me, may not be applicable, while determining cost of provision of services between branches (separately registered) or for sharing of costs.<\/p>\n \u201cIf I have the belief that I can do it, I shall surely acquire the capacity to do it even if I may not\u00a0\u00a0 have it at the beginning.\u201d<\/em><\/p>\n – Mahatma Gandhi<\/p>\n","protected":false},"excerpt":{"rendered":" Central Excise Act, 1944Held<\/h3>\n
\nS. 4: Valuation of excisable goods for purpose of charging of duty of excise – Assessable value – Captive consumption – Profit margin – cost of production and notional profit to be added, are to be determined before deciding whether there is any shortfall of duty – Case remanded for fresh decision considering costing principles laid down in Cadbury\u2019s case [Central Excise (Valuation) Rules, 1975, Rule 6(b)(ii)]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[5],"tags":[],"class_list":["post-12979","post","type-post","status-publish","format-standard","hentry","category-gst-law"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-3nl","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/12979","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=12979"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/12979\/revisions"}],"predecessor-version":[{"id":12980,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/12979\/revisions\/12980"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=12979"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=12979"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=12979"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}