2006 (1) TMI 638 - SC - Central Excise

Summary

Issues involved:
Whether the cost of scrap sold by respondent is includible in the value of components manufactured by it.

Analysis:
The Supreme Court heard the matter concerning the inclusion of the cost of scrap sold by the respondent in the value of components manufactured by it. A three-Judge Bench felt it necessary to obtain a report from a Cost Accountant to address the costing aspects of the case. The parties agreed to invoke the provisions of Section 14A of the Central Excise Act, 1944. The Court accepted the report of the Cost Auditor, Mr. Sanjay R. Bhargave, and heard the parties in reference to the report.

The Court determined that the matter required re-hearing by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench in Mumbai. This decision was based on the various costing aspects highlighted in the Cost Auditor's report. The Court noted that the report favored the respondent, but the Revenue's counsel raised the need for clarifications in certain areas. It was deemed essential for the Tribunal to decide the case based on factual aspects and relevant legal provisions.

Consequently, the Supreme Court remitted the matter to the Tribunal for a fresh hearing with reference to the Cost Auditor's report. Both parties were allowed to present their positions regarding the report. The Revenue's counsel was directed to submit a copy of the report to the Tribunal within six weeks for scheduling a new hearing date. The Tribunal was granted the authority to consider all connected issues during the rehearing process. Ultimately, the appeals were disposed of accordingly by the Supreme Court.