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TMI Blog2013 (11) TMI 1147X X X X Extracts X X X X X X X X Extracts X X X X ..... There is no sale involved in the transfer of goods to other division of ITC, the valuation would be under Rule 8 of the Valuation Rules, by adopting 115% of cost of production - the amount of Debit Notes would not be included while determining assessable value at Badrachalam Unit - Then, it is difficult to accept that the said amount of Debit Notes would be included in the assessable value of the applicant - Prima facie, there is no reason to include the amount of Debit Note in the assessable value at the hand of the applicant. - E/388/2012 - Misc. Order No. 41340/2013, dated 21-5-2013 - Dated:- 21-5-2013 - Pradip Kumar Das And Mathew John, JJ. For the Appellants : Shri J P Khaitan, Sr. Counsel, Ms L Maithili, Adv . For the Respondents : Shri Alok Shukla , Commissioner (AR), K S V V Prasad, Joint Commissioner (AR) PER : Pradip Kumar Das The applicant is engaged in the manufacture of "Printed Cartons and other Packing Materials" classified under Chapter 48 and 76 of the Schedule to the Central Excise Tariff Act, 1985. They received 'Paper' and 'Paper Boards' from their unit at Badrachalam , who paid duty under Rule 8 of the Central Excise Valuation (Determination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis of Debit Notes (i.e.,IDSC /ICNC). Commissioner of Central Excise, Hyderabad dropped the proceeding by Order-in-Original No.09/2004-Commr., dated 26.07.2004. 2.2 He also submits that the duty was also demanded on the ground that while determining the cost of manufacture, the applicant had taken into consideration 100% of cost of manufacture of Badrachalam unit and not the invoice value, which was 115% /110% of such cost of manufacture, adopted for such transfer. The learned senior counsel submits that Rule 8 of the Valuation Rules, 2000 provides for determination of actual cost of raw materials, therefore, such notional amount of 15% or 10% would be excluded from the invoice value of the Badrachalam Unit. He submits that the Tribunal in the case of Commissioner of Central Excise, Chennai Vs Everedy Industries (I) Ltd. reported in 2011 (274) E.L.T. 564 (Tri.-Chennai) rejected the Revenue's appeal holding that cost of materials would be the assessable value as per CAS-4. The facts of the present case are identical to the Eveready Industries case (supra). 2.3 He also submits that the entire demand is barred by limitation. It is submitted that the present demand is related ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e non-inclusion of 15%/10% of the invoice value of the Badrachalam Unit, he relied upon the decision of the Mumbai Bench of the Tribunal in the case of Tata Iron and Steel Co. Ltd. Vs Commissioner of Central Excise, Thane-II reported in - 2013-TIOL-707-CESTAT-MUM. He submits that the applicant availed the entire amount of CENVAT credit on the basis of the invoices issued by Badrachalam Unit and while determining the value, they have excluded the 15%/10% of invoice value, is totally contradictory. He submits that the Order-in-Original dated 16.07.2004 as relied by the learned Senior Counsel is not related to the issue of Debit Notes. In that case, the issue was demand of duty on transaction value and in the present case, the allegation is contravention of Rule 8 of Valuation Rules, 2000. 3.3 It is contended that the applicant had not disclosed the issue of Debit Notes at any point of time. He drew the attention of the Bench to letter dated 28.10.1997 relied upon by the applicant which was issued by the earlier manufacturer. Hence, the applicant suppressed the material facts and, therefore, the extended period of limitation would apply. He further submits that excess amount of Rs.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. Trade discount, rebates and other similar items will be deducted for determining the cost of materials, Cenvat credit, credit for countervailing customs duty, sales tax set off, VAT, duty drawback and other similar duties subsequently recovered/recoverable by the enterprise shall also be deducted." 5.9 Absorption of Overheads: Absorption of Overheads shall be analysed into variable Overheads and Fixed Overheads Variable Overheads are the items, which change with the change in volume of production, such as cost of utilities etc. Fixed Overheads are the items whose value do not change with the change in volume of production such, as salaries, rent etc. The Variable Production Overheads can be absorbed in production cost based on actual capacity utilisation . The Fixed Production Overheads and other similar item of Fixed Costs such as, quality control cost, research and development cost, administrative overheads relating manufacturing shall be absorbed in the production cost on the basis of the normal capacity utilisation of the plant, whichever is higher. 5.17 Abnormal and Non-recurring Cost: Abnormal and non-recurr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pped by the Commissioner of Central Excise, Hyderabad by Order dated 26.07.2004. It has been observed that there is no sale involved in the transfer of goods to other division of ITC, the valuation would be under Rule 8 of the Valuation Rules, by adopting 115% of cost of production. So. the amount of Debit Notes would not be included while determining assessable value at Badrachalam Unit. Then, it is difficult to accept that the said amount of Debit Notes would be included in the assessable value of the applicant herein. Prima facie, we do not find any reason to include the amount of Debit Note in the assessable value at the hand of the applicant. 9. In the impugned order, the Commissioner observed that the value charged by way of Debit Notes [IDSC (ICNC)] coupled with the value indicated in the stock transfer invoices in respect of the goods transferred to their own Unit are to be the actual price of the goods transferred. It is seen that the Debit Notes are the difference between the market price of the product adopted for sale to third parties and the value charged in the invoices raised by the Badrachalam Unit. It is contended by the learned Senior Counsel that the applican ..... X X X X Extracts X X X X X X X X Extracts X X X X
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