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TMI Blog2011 (7) TMI 973X X X X Extracts X X X X X X X X Extracts X X X X ..... riod - Board’s Circular No. 6/29/2002-CX.I, dated 13-2-2003, the cost of the goods cleared for captive consumption must be determined in accordance with the general principles of costing and accordingly for this purpose, CAS-4 Standard is to be adopted - As per CAS-4, for determining the cost of goods, the interest cost is not to be included - Supreme Court in the case of C.C.E., Pune v. Cadbury India Ltd. reported in (2006 (8) TMI 2 - SUPREME COURT OF INDIA) 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 purpose CAS-4 must be adopte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining the assessable value on the basis of the cost of production, the appellant did not include the element of interest on loans and loss of materials. According to the department, if these elements are also included, revised cost works out to Rs. 6245.50 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 11AB ibid and also for imposition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited reported in 2006 (200) E.L.T. 353 (S.C.), and that demand is time-barred, as there was no suppression or wilful misstatement on the part of the appellant and hence only normal period is applicable, as, as per the observations of the Commissioner (Appeals) in para-8 of the impugned order-in-appeal, the assessable value has been declared in price declaration filed under Rule 173C and hence, there was no misdeclaration. 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 13-2-2003 would be applicable only prospectively, that in the present case, which pertains to the period 1995-96 to 1999-2000, it is the earl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board s Circular No. 6/29/2002-CX.I, dated 13-2-2003, the cost of the goods cleared for captive consumption must be determined in accordance with the general principles of costing and accordingly for this purpose, CAS-4 Standard is to be adopted. 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 13-2-2003 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 C.C.E., Pune v. Cadbury India Ltd. reported in 2006 (200) E.L.T. 353 (S.C.) has held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction. The appellant produced along with the reply to the Show Cause Notice the following authoritative texts: Wheldon s Cost Accounting and Costing Methods, Cost Accounting methods by B.K. Bhar, Principles of Cost Accounting by N.K. Prasad, Glossary of Management Accounting Terms by ICWAI. 11. In C.C.E. 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 conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umption and formulated the standards for costing: CAS-4. According to CAS-4 the definition of cost of production is as under : Cost of Production : Cost of Production 4.1. shall consist of Material consumed, Direct wages and salaries, Direct expenses. Works overheads, Quality Control cost, Research 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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