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TMI Blog2011 (2) TMI 1006X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant's plea is that materials loss referred in the Balance Sheet is ore concentrates loss and since duty is being demanded in respect of ore concentrates, its cost cannot be included. Even in reply to the show cause notice, the appellant had clarified the loss of raw materials referred to in the balance sheet is the loss of ore concentrates and since the duty has been paid on the ore concentrates, the loss of cost of ore concentrates cannot be taken into account for determining its cost. Thus if the department's allegation is that the loss of raw materials referred to in the balance sheet refers to loss of ores or other raw materials not of ore concentrates, the burden of proving this would be on the department, but no evidence in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 per M.T. instead of cost of Rs.6204/- per M.T. adopted by them. It is on this basis that the department alleged that there was short payment of duty of Rs.8,19,569/- during 1995-1996 to 1999-2000 (October, 1999) period. Accordingly, a show cause notice dated 11.5.2000 was issued to the appellant for recovery of above mentioned allegedly short paid duty along with interest under proviso to Section 11A(1) of the Central Excise Act, 1944 read with Section 11 AB ibid and also for imposition of penalty under Section 11 AC ibid. 2. The show cause notice was adjudicated by the Joint Commissioner vide order-in-original dated 3.1.2001 by which the duty demand as raised in the show cause notice was confirmed along with interest and penalty of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r (Appeals) in para-8 of the impugned order-in-appeal the assessable value has been declared in price declaration filed under Rule 173 C and hence, there was no mis-declaration. 6. Shri Nitin Anand, ld. Departmental Representative, defending the impugned order by reiterating the findings of the Commissioner (Appeals) pleaded that Board s Circular dated 13.02.2003 would be applicable only prospectively, that in the present case, which pertains to the period 1995-96 to 1999-2000, it is the earlier Circular of the Board No.6/28/94- CX.1 dated 30.10.1996, which would be applicable, according to which the cost of interest on loans must be taken into account while determining the cost of zinc/lead concentrate, that the appellant have not prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per CAS-4, for determining the cost of goods, the interest cost is not to be included. The department s plea, however, is that Circular dated 13.02.2003 of the Board has only prospective application and is not applicable for the period prior to 13.2.2003, for the purpose of determining the cost of production under Rule 6(b)(ii) of the Central Excise Valuation Rules. However, Hon ble Supreme Court in the case of CCE, Pune Vs. Cadbury India Ltd. reported in 2006 (200) ELT 353 (SC) has held that for determining the cost of production for the purpose of determining the assessable value under Rule 6(b)(ii) of Central Excise (Valuation) Rules, 1975, the cost must be determined, strictly according to the principles of costing and for this purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CWAI. 11. In? CCE v. Dai Ichi Karkaria Ltd., (1999) 7 SCC 448, at page 459 it has been held that the normal principles of accountancy shall be applied to determine the cost. In this decision this Court observed: Learned Counsel for the respondents drew our attention to the judgment of this Court in Challapalli Sugar Ltd. v. CIT. The Court was concerned with written-down value. The written-down value had to be taken into consideration while considering the question of deduction on account of depreciation and development rebate under the Income Tax Act. Written-down value depended upon the actual cost of the assets to the assessee. The expression actual cost had not been defined in the Income Tax Act, 1922 and the question was whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Development cost, Packing cost, Administrative Overheads relating to production. 13. The cost accounting principles laid down by ICWAI have been recognized by the Central Board of Excise and Customs vide Circular No. 692/8/2003-CX., dated 13-2-2003. The circular requires the department to determine the cost of production of captively consumed goods strictly in accordance with CAS-4. 9. We find that the same view has been taken by the Tribunal in the case of Nirma Ltd. (supra). In view of this, the Commissioner (Appeals) s order with regard to inclusion of interest cost in the cost of ore concentrates is not sustainable. As regards the loss of raw materials, the appellant s plea is that materials loss referred in the Balance Shee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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