2014 (1) TMI 732 - AT - Central Excise

Rectification of Appeal - Clearance of castings made to other unit - Revenue was of the view that non inclusive of interest cost is not the only allegation and that bulk of duty demands on account of non-inclusive of 15% profit margin in the cost Held that - The assessable value in respect of clearances was to be taken on 115% of the cost of production and the cost of production for the purpose was to be determined interest of CAS-4 standard of ICWAI, in term of CAS-4, interest on loan was not includable in the cost - The department itself has accepted that appellants have discharged duty liability on cost of production plus 15% and thus plea in the ROM that the profit margin had not been included is not correct Decided against Revenue.

Summary

Issues:
Rectification of mistake apparent on record in Final Order regarding duty demand calculation based on cost of production including interest on loan and profit margin.

Analysis:
The case involved an ROM application filed by the Department seeking rectification of a mistake in Final Order No. A/815/2012 dated 10.7.12. The dispute revolved around duty liability on castings of iron and steel for motor vehicle parts cleared to another unit from May 2001 to September 2001. The Department alleged that duty was paid on a lower value, leading to a duty demand of Rs.34,38,979/-. The main objection was the inclusion of interest on loan in the cost of production, which the Commissioner upheld, resulting in the duty demand. However, the Tribunal set aside the order, stating that the assessable value should be based on 115% of the cost of production, excluding interest on loan as per CAS-4 standard of ICWAI.

The ROM application contended that the duty demand was primarily due to the non-inclusion of a 15% profit margin in the cost of production. The Department reiterated this ground, emphasizing the need to rectify the factual mistake. On the other hand, the Appellant argued that they had already paid duty on 115% of the cost of production, including the profit margin, as confirmed by the Commissioner's findings. They maintained that there was no mistake in the final order and that the duty liability was discharged correctly based on the assessable value determined under Rule 8 of the valuation Rule.

After hearing both sides and examining the records, the Tribunal found that the Department had acknowledged that the duty liability was discharged on the cost of production plus 15%. Therefore, the plea in the ROM application regarding the non-inclusion of the profit margin was deemed incorrect. Consequently, the Tribunal dismissed the application, concluding that there was no merit in the Department's claim for rectification.

In conclusion, the Tribunal upheld the original decision, emphasizing that the duty liability was correctly discharged based on the cost of production, including the profit margin, as per the valuation rules.