1998 (8) TMI 169 - AT - Central Excise

Summary

Issues:
1. Determination of assessable value of goods consumed captively under Rule 6(b)(ii) of the Central Excise Valuation Rules.

Analysis:
The judgment revolves around the issue of how to calculate the assessable value of goods consumed captively under Rule 6(b)(ii) of the Central Excise Valuation Rules. The dispute arose regarding whether the profit earned by the steel drum plant attached to a company should be considered or if the profit of the company as a whole is relevant. The Collector (Appeals) held that the profit of the company, being a juristic person, is crucial. However, the appellant argued that the net profit, not the gross profit, should be added, citing a Board's Order and principles of accountancy. The appellant contended that depreciation should not be included in the profit calculation. The Tribunal's decision in a similar case was also referenced, emphasizing the need to re-examine profit margins without linking them to the end product. Ultimately, the matter was remanded to the original authority to decide whether gross profit or net profit should be added to the assessable value.

The key contention from the appellant's side was that net profit, not gross profit, should be considered for calculating the assessable value. They argued that the authorities should have added the profit before tax, which accounts for interest and depreciation, rather than gross profit. The appellant relied on a Board's Order and a book on accountancy to support their stance. Additionally, they highlighted a Tribunal decision that emphasized the exclusion of depreciation in profit calculations. The appellant's position was clear that depreciation should not be factored in while determining the profit margin.

On the other hand, the respondent submitted that the issue presented before the authorities differed from the arguments made before the Bench. They suggested that the matter should be referred back to the lower authorities for reconsideration. However, the Bench found that the core issue of whether gross profit or net profit should be added to the assessable value was not addressed by the lower authorities. Consequently, the impugned order was set aside, and the case was remanded to the original adjudicating authority for a fresh decision on this specific issue. The appeal was allowed on the grounds of remand, focusing on the determination of whether gross profit or net profit should be included in the assessable value calculation.

In conclusion, the judgment primarily dealt with the interpretation of Rule 6(b)(ii) of the Central Excise Valuation Rules concerning the assessable value of goods consumed captively. The dispute centered on whether gross profit or net profit should be added to the assessable value calculation. The appellant argued for the inclusion of net profit, citing relevant legal provisions and principles of accountancy, while the case was remanded to the original authority for a fresh decision on this specific issue.