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TMI Blog2013 (3) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... ct is to be taken into account and not the profit of all the divisions of respondent factory. No merit in the appeals filed by Department. Thus Commissioner (Appeals) allowing the appeals of the respondent with consequential relief can be computed only if an evasion of valuation of intermediate product i.e. yarn is undertaken by the jurisdictional authority to calculate the incidence of excise duty. Accordingly, the jurisdictional Assistant Commissioner directed to recalculate the differential excise duty, if any, payable by the assessee in terms of the observation made in this order. - E/929-931/2006 - A/1316-1318/2012-EX(BR)(PB) - Dated:- 9-11-2012 - Ajit Bharihoke and Rakesh Kumar, JJ. Shri I. Baig, AR, for the Appellant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in such cases where factory gate price was not available on payment of excise duty on provisional basis on the valuation arrived at by adding margin of profit to the cost of manufacture of yarn. The jurisdictional Assistant Commissioner vide three separate orders in original differed with the provisional assessment of the respondent and raised the demand of differential excise duty amounting to Rs. 20 lakhs for the financial years 1998-99, Rs. 5,75,395/- for the financial year 1999-2000 and Rs. 72,953/- for the period w.e.f. 1-4-2000 to June 2000. The basis on which the concerned Additional Commissioner arrived at valuation of more than the provisional valuation was that the provisional valuation done by the respondent was contrary to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30-10-1996 when intermediate excisable goods are captively used for manufacture of final product and the ex-factory price is not available, in such a case the valuation for the purpose of excise duty is the cost of the manufacture of intermediate goods reasonable profit margin which assessee would have earned on sale of such goods. Ld. AR pleaded that since the respondent has failed to produce the separate accounts to throw light on the profit margin yarn manufacturing division the jurisdictional authority was right in assessing value of the yarn captively consumed by taking into account the profit margin of entire manufacturing unit of the respondent including yarn manufacturing as well as weaving division for the previous years. He thus c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the manufacturer would have earned. In our view the word profit used in Rule 6(b)(ii) relates to the profit in respect of intermediate product and not the final product which emerges after use or processing of the intermediate product. 10. C.B.E. C. Circular No. 258/92/96-CX., dated 30-10-1996 relied upon by the Department clarified as to how Rule 6(b)(ii) for the purpose of valuation of intermediate product used for captive consumption has to be applied. Relevant portion of the aforesaid Circular is reproduced thus : 3. The matter has been further examined in consultation with the Cost Accounts Branch of Department of Expenditure. Board has observed that the method of calculation provided under Rule 6(b)(ii) of the Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o this extent. Annexure A clarification has been sought whether gross profit or gross profit before tax has to be taken into consideration for determination of assessable-value under Rule 6(b)(ii) of Central Excise Rules, 1975. It is clarified that for the purpose of assessable value, profit before tax should be considered. Profit before tax is, invariably, a distinct item appearing in the Profit Loss Account of companies. Profit before tax is arrived at after providing for Interest and depreciation. Therefore, cost of production of the captively consumed goods will also include applicable interest, depreciation etc. On reading of the above we find that instruction of the Board as per this Circular is consistent with the Rule 6(b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. (supra) instead in para 3 of judgment, the Hon ble Supreme Court has observed thus : 3. It was common ground between the parties before the Tribunal that the cost of production under erstwhile Rule 6(b)(ii) of Central Excise (Valuation) Rules, 1975 [for short the Rules ] will have to be determined based on the actual cost of production at the factory of production alone and not the costs of production in all the textile units of the respondent-assessee together. This point has been decided in a recent judgment of this Court in the case of Commissioner of Central Excise, Pune v. M/s. Cadbury India Ltd. [JT 2006 (7) SC 147]. 12. From the aforesaid observations of the Supreme Court it is clear that for determination of valuation of in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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