9911796707
TMI Blog2007 (2) TMI 545X X X X Extracts X X X X X X X X Extracts X X X X ..... of cost, for promotion of their products in the market. Duty was paid on the physician s samples on the basis of an assesssable value arrived at a pro-rata basis from the sale price of similar goods sold in the market. However, in view of the Board s Circular No. 642/34/2002 dated 1-7-2002, the assessee (respondents) reworked the assessable value of the physician s samples , cleared during the above period, at 115% of cost of production and requantified the amount of duty accordingly, whereupon it was found that the duty already paid by them was higher by an amount of Rs. 30,82,302/- than the duty so quantified. The assessee filed a claim for refund of this amount of duty and produced their statement of cost construction along with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es cover contingencies where sale is involved in some form or the other. Therefore, the residuary Rule 11 will have to be adopted along with the spirit of Rule 8. In other words, the assessable value would be 115% of the cost of production or manufacture of the goods . Both sides agreed that the assessable value of the physician s samples would be 115% of the cost of production or manufacture of the goods. The dispute is as to how to arrive at this 115% of the cost of production. According to the respondents (assessee), it should be arrived at by forward working i.e., by adding factory overheads to material cost to get the cost of production and then calculating 115% thereof. In this method of computation of the assessable value, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) Description 8/01 to 3/02 4/02 to 7/02 Assessable Value of Sale products 236.49 113.32 Less: S D 30.85 14.67 Cost of Production 205.64 98.65 115% of Cost of Production 236.49 113.45 Duty payable 37.83 18.15 Duty paid 37.83 18.13 Refund 0.00 0.02 Net Refund 0.02 3. The principles of determining cost of production for captive consumption relatable to Rule 8 of the Central Excise Valuation Rules were formulated by ICWAI and the same, referred to as CAS-4 in trade circles, were adopted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g S D expenses from the assessable value of identical goods sold in the market does not appear to be in keeping with the costing standards formulated by ICWAI and recognised by the Board. In the case of Commissioner of Central Excise, Pune v. Cadbury India Ltd. [2006 (200) E.L.T. 353 (S.C.)] cited by learned Consultant, it was held by the apex court that cost of production of captively consumed goods was to be determined strictly in accordance with CAS-4. Their Lordships treated cost of production of such intermediates as the sum total of the direct labour cost, direct material cost, direct cost of manufacture and factory overheads of the factory producing such intermediate products. This would mean that their Lordships found CAS-4 to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal authority itself before it arrives at the correct cost of production of the subject goods in terms of CAS-4. In the circumstances, we are of the view that the valuation of the physician s samples cleared by the respondents during the period of dispute should be done afresh by the original authority by strictly following CAS-4 read with Board s Circular dated 13-2-2003. 5. In the result, the orders of both the lower authorities are set aside and this appeal is allowed by way of remand to the original authority for de novo adjudication in terms of this order and in accordance with law. Needless to say, a reasonable opportunity of being heard shall be given to the assessee. (Operative portion of the order pronounced in open court on 23 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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