2023 (3) TMI 797 - AT - Central Excise

Demand of differential duty - valuation of the packaging materials manufactured in the Chennai Unit of the appellant - adjustment of excess duty paid against duty short paid on finalization of provisional assessment against the appellant - HELD THAT - The legal issues dealt with in the impugned order have already been decided by this Tribunal, for the earlier period in M/S. ITC LIMITED VERSUS THE COMMISSIONER OF CENTRAL EXCISE 2023 (3) TMI 730 - CESTAT CHENNAI , as pointed out by learned counsel for the appellant, where it was held that Larger Bench in M/S ITC LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI 2016 (4) TMI 280 - CESTAT CHENNAI answered the reference, holding that the decision of the Chennai Bench of the CESTAT rendered in Final Order No. 542/2010 dated 11.05.2010 in the Revenue s appeal against M/s. Eveready Industries Ltd. 2011 (4) TMI 141 - CESTAT, CHENNAI and the subsequent decision of the same Regional Bench as reported in CCE, CHENNAI VERSUS M/S. EVEREADY INDUSTRIES (I) LTD. 2011 (4) TMI 141 - CESTAT, CHENNAI represent the correct position in law - The findings of the Larger Bench are The percentage of loading on such cost of production, mandated by provisions of Rule 8 for remittance of excise duty by the Bhadrachalam unit cannot not however be considered as comprised in the cost of the raw material consumed for manufacture of packaging material and thus constituting the cost of production at the Chennai unit. It has not been brought to our notice that the said Final Order, which pertains to the past period, has been either varied, modified or set aside as of date. Hence, there are no reason to deviate from the same for demands pertaining to the subsequent period. Appeal allowed.

Summary

Issues involved:
The judgment involves the consideration of various issues including the inclusion of IDSC debit notes in the cost of raw materials, valuation of paper received from a different unit, loading unabsorbed overheads to the cost of production, and the adjustment of excess duty paid against duty short paid on finalization of provisional assessment.

Issue 1:
The first issue was whether the IDSC debit notes should be considered as part of the cost of paper and paper board received from the Bhadrachalam Unit. The Tribunal had previously decided this issue in favor of the appellant for the prior period, and this decision was upheld in the current judgment.

Issue 2:
The second issue revolved around whether the value of paper received from the Bhadrachalam unit should be considered at 115%/110% of the cost of production or just 100% in the hands of the appellant. This issue was also decided in favor of the appellant based on the Tribunal's previous rulings.

Issue 3:
The third issue concerned whether the unabsorbed overheads due to idle capacity of a machine should be loaded to the cost of production and the cost of closing stock. The Tribunal ruled in favor of the appellant on this issue as well, as the previous order on this matter had become final.

Separate Judgment by Larger Bench:
A separate judgment by the Larger Bench addressed the issue of inter-unit transfer of goods for captive consumption. It was determined that the actual cost of production (100% of the cost of production) should be considered as the cost of raw material for the receiving unit, excluding notional loading. The decision of the Chennai Bench was upheld as the correct position in law, overruling the decision of the Mumbai Bench on the application of Valuation Rules.

In conclusion, the Tribunal found in favor of the appellant on all issues discussed in the judgment. The impugned order was set aside, and the appeals were allowed with consequential relief, if any, as per the law.