2013 (5) TMI 165 - AT - Central Excise

Valuation dispute - appellant was clearing the final products on the basis of 110% of the cost of production. According to the Revenue, the said cost of production dos not stand correctly calculated & arrived at by them in terms of CAS- 4. Accordingly, proceedings were initiated. Held that - On going through the detailed reply filed by the appellant and the impugned order passed by the Commissioner, there are various discrepancies pointed out by the appellant in determining the cost of production in terms of CAS -4 stand referred to but not decided by the Commissioner. Thus, matter is remanded back. We make it clear that we have not gone through the submissions as regards the limitation etc. and the appellants are at liberty to raise the same before the adjudicating authority.

Summary

Issues:
Valuation of final product based on cost of production under CAS-4.

Analysis:
The dispute in this case revolves around the valuation of the appellant's final product based on the cost of production. The appellant was clearing goods at 110% of the cost of production, which the Revenue contested, stating that the cost was incorrectly calculated as per CAS-4. The appellant raised concerns about anomalies in the audit party's calculation sheet, specifically regarding works overheads like insurance charges, watch and ward charges, and bus hire charges not being calculated in accordance with CAS-4 standards. The appellant argued that fixed production overheads should be absorbed based on normal capacity or actual capacity utilization, whichever is higher, as per CAS-4 guidelines.

The adjudicating authority did not address the appellant's submissions regarding the correct calculation of the cost of production. Instead, the authority focused on the assessable value calculation based on CAS-4 provisions. However, the appellant contended that overhead expenses were distributed based on actual production instead of normal capacity, leading to discrepancies in the assessable value calculation. The Tribunal found the appellant's submissions to be valid and set aside the impugned order, remanding the matter for a proper determination of the cost of production in line with CAS-4 principles.

It is important to note that the Tribunal did not address issues related to limitations, leaving the appellants free to raise these before the adjudicating authority. The Stay petition and the appeal were disposed of accordingly, with the matter remanded for a fresh assessment based on CAS-4 guidelines.