2011 (6) TMI 636 - AT - Central Excise

Valuation of goods captively consumed - submitted that for the period January, 1992 to December, 1995, a show-cause notice was issued to them on the identical issue of undervaluation of their captively consumed goods and vide Order No. 2012 & 2013 of 2005 dated 6.10.2005, the Bangalore Bench of this Tribunal has held that addition of notional profit of 10% is good enough Held that - appellants had correctly valued their captively consumed goods, appellants have already paid differential duty as demanded by the department and credit has been taken at the recipient s, appeal is disposed of accordingly

Summary

Issues: Valuation of captively consumed goods - Method of valuation

In this case, M/s Castrol India Ltd. filed an appeal against the demand for differential duty on goods captively consumed by them, alleging undervaluation. The dispute arose from the method of valuation of captively consumed goods, specifically regarding the addition of profit element. The appellants added a notional profit of 10% to the cost, while the department insisted on adding profit based on the percentage of profit for the previous year, as per a Board's Circular. The period in question was January 1996 to January 2000. The lower authorities upheld the demand, leading to the appeal.

The appellant argued that a previous Tribunal order in their favor for the period January 1992 to December 1995 supported their position of adding a notional profit of 10%. They contended that the decision had attained finality as no appeal was filed by the department against it. Additionally, they cited a Supreme Court decision to bolster their case. The appellant had paid the demanded duty and transferred the credit to a sister unit, not contesting the duty itself but objecting to the imposition of interest.

On the other hand, the respondent maintained that the appellants should adhere to the method outlined in the Board's Circular and pay duty by adding a profit element based on the previous year's profit percentage. As the appellants did not follow this method, the lower authorities' decision was justified, according to the respondent.

The Tribunal deliberated on the central issue of the appropriate method for valuing captively consumed goods. Referring to a previous decision by the Bangalore Bench in the appellant's favor, the Tribunal held that adding a notional profit of 10% sufficed for valuation. Consequently, the Tribunal ruled in favor of the appellants, stating that they had correctly valued their captively consumed goods. Given that the appellants had already paid the differential duty and the credit had been utilized by the recipient, the Tribunal saw no need to intervene further, except to prevent additional adverse consequences like interest based on the impugned order.

Ultimately, the appeal was disposed of in favor of the appellants, affirming their valuation method for captively consumed goods and relieving them of further financial obligations stemming from the disputed demand.