9911796707
TMI Blog2015 (10) TMI 1990X X X X Extracts X X X X X X X X Extracts X X X X ..... ed rectified spirit by the Gorakhpur unit of the appellant to their Kashipur Unit during the period from December, 2012 to March, 2012. In respect of these clearances which are to be treated as clearance for captive consumption, the appellant Gorakhpur Unit was discharging duty liability on the value determined under Rule 8 of the Central Excise Valuation Rules, 2000, that is, on the basis of 110% of the cost of production. There is no dispute that the cost of production in terms of the CBEC's Circular is to be determined on basis of CAS-IV format developed by ICWAI. The dispute is only about the calculation of the cost of production on the basis of CAS-IV format. The appellant during the period of dispute had divided the expenses on ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the cost accounting standards for determining cost of production of the goods for captive consumption; that in terms of costing guidelines, the expenses on account of fixed over heads which are the items of expenses whose value does not change with the volume of production like salaries/ rents, etc. are to be absorbed in the production cost on the basis of normal capacity utilization or actual capacity utilization, whichever is higher, while the variable production costs like cost of utilities, raw meterial etc. shall be absorbed in the production cost based on the actual capacity utilization; that based on these costing guidelines, the expenses on account of salaries and wages, direct expenses, depreciation, works over heads and administ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or hearing of their appeal and recovery thereof may be stayed. 4. Shri Ranjan Khanna, ld. DR, opposed the stay application by reiterating the findings of the Commissioner. He pleaded that even as per the principles regarding determining of cost of production of the goods manufactured for captive consumption, utilities expenses are variable over heads and the same are to be absorbed in the production cost based on the actual capacity utilization; that the expenses on account of utilities during 2008-2009 were about 15.19 crore; that the appellant have, therefore, wrongly absorbed the expenses on account of utilities on the basis of normal capacity utilization which was four times higher than the actual capacity utilization during the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , for its use in the manufacture of ethylene glycol. There is no dispute that the assessable value of the de-natured rectified spirit manufactured and cleared by the Gorakhpur unit, who is appellant in this case, was to be determined on the basis of 110% of the cost of production under Rule 8 of the Central Excise Valuation Rules, 2000. There is also no dispute that in terms of the Board's Circular No. 692/8/2003CX dated 13/3/2003, the cost of production was to be determined strictly in accordance with the CAS-IV Format Standard developed by the Institute of Cost Works Accountant of India (ICWAI). The dispute is only about application of the CAS Format and its guidelines for calculation of the cost. The various expenses for manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, raw material, etc., the fixed over heads are those whose value does not change with the volume of production, such as salaries, rent, etc and according to this para 5.9 while variable production over heads shall be absorbed in production cost based on actual capacity utilization, i.e., on the basis of actual production, the fixed production over heads and similar items of fixed cost such as salaries & wages, administrative over heads, depreciation, etc relating to manufacturing, which do not change with the volume of production shall be absorbed in the production cost on the basis of normal capacity or actual capacity utilization, whichever is higher. Applying this guideline, prima facie, the expenses on account of salaries and wages, di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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