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2018 (7) TMI 1930 - AT - Central ExciseValuation - SURF and SUNLIGHT branded Bulk Detergent Powder - stock transfer to job-workers for packing into smaller consumer packs - included of cost of service in assessable value - HELD THAT - The issue is no more resintegra in view of the decision of the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS CADBURY INDIA LTD. 2006 (8) TMI 2 - SUPREME COURT OF INDIA . The Hon ble Supreme Court has held that cost of production of captively consumed goods to be determined strictly in accordance with CAS-4, as laid down by the Institute of Cost and Accounts of India. In the present case the assessee was following the practice of collecting cost of Power, Water, Furnace Oil, HSD under the nomenclature cost of service . Subsequently with introduction of CAS-4 vide CBEC Circular dated 13.02.2003, the cost of production was arrived at in accordance with CAS-4 formerly and there was no occasion for addition to any other service expenses. Appeal allowed - decided in favor of appellant.
Issues Involved:
Valuation of Bulk Detergent Powder stock transferred to job-workers based on CAS-4 formula and inclusion of 'cost of service' in costing. Detailed Analysis: Issue 1: Valuation of Bulk Detergent Powder Stock The case involved the valuation of 'SURF' and 'SUNLIGHT' branded Bulk Detergent Powder stock transferred to job-workers for packing into smaller packs. The appellant based their costing on CAS-4 formula, including elements like 'cost of service.' The Department alleged that certain elements were not included, leading to Show Cause Notices and demand confirmation by the adjudicating authority. Analysis: The appellant argued that they followed CAS-4 formula as per CBEC Circular dated 13.02.2003 for valuation. They contended that 'cost of service' was already included in the CAS-4 certificates issued by Cost Accountants, and hence, the demand was not sustainable. They cited judgments like Cadbury India Ltd. and Raymonds Ltd. to support their stance. Issue 2: Extended Period and Suppression Allegation The Department alleged that the appellant suppressed facts and did not include 'cost of service' in costing, leading to demand confirmation and penalty imposition under Section 11AC of the Central Excise Act, 1944. Analysis: The appellant argued that they acted bona fide and there was no ulterior motive to undervalue the stock transferred to job-workers. They contended that all relevant expenses were included in the costing as per CAS-4 formula, making the demand unsustainable. They cited judgments like Jay Yuhshin Ltd. and Nirlon Limited to support their argument against the extended period invocation. Conclusion: The Tribunal, per the decision in Commissioner of Central Excise vs. Cadbury India Ltd., held that cost of production for captively consumed goods must strictly adhere to CAS-4 standards. Considering the appellant's adherence to CAS-4 formula and inclusion of 'cost of service' in the costing, the impugned order was set aside. The appeal was allowed, emphasizing the importance of CAS-4 certificates and rejecting the Department's allegations of suppression and extended period invocation.
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