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TMI Blog2018 (5) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... 41067-41073/2018 - Dated:- 10-4-2018 - Hon ble Ms. Sulekha Beevi, Member (Judicial) And Hon ble Shri Madhu Mohan Damodhar, Member (Technical) Shri Krishna Srinivasan, Advocate for the Appellant Shri K.Veerabhadra Reddy, JC (AR) for the Respondent ORDER Per Bench The appellants are engaged in the manufacture and supply of Lifts and components thereof. AS there is no sale of parts and components as such and being exclusively used for captive consumption in the erection of lifts at the customers site, the value is required to be determined as 110% of the cost of production in terms of Rule 8 of Valuation Rules, 2000 read with Section 4 (1) (b) of the Central Excise Act, 1944. The appellants could not arrive at the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are now before Tribunal. 3. On behalf of the appellants, the Ld. Counsel Shri Krishna Srinivasan submitted that the primary raw material used for manufacture of components for lifts is steel sheets. While steel sheets are available in various dimensions in the market, they rarely match/suit the exact requirements/specifications of customer s project orders as the lifts will inevitably vary according to the building parameters of each site. The purchased steel sheets are therefore cut/bended/sheared according to the specific requirement of the order in the factory site of the appellants. This results in left over parts treated as remnant parts. These balance remnant steel sheets/cut outs cannot be utilized for further consumption as these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od for arriving the cost of production. As per CAS-4 method, the cost of production has to be determined by taking the materials consumed. The cost of the materials consumed shall include all materials directly identified for production of goods. The value of scrap has been reduced by the Cost Auditor. The appellant has availed Cenvat credit of all the raw materials which have been used for production. Therefore, the Cost Auditor has correctly arrived at the cost of production by including the entire cost of materials consumed and deducting the value of wastes and scrap. 5. Heard both sides. 6.1 The main contention put forward by the Ld. Counsel is that the gross value of the remnant parts after cutting the required dimensions from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t only on that part of raw material which is contained in the good quality finished product which were cleared . 6.2 Even as per the CAS-4 method the cost of production is to be arrived as under:- Cost of production 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. To arrive at cost of production of goods dispatch for captive consumption, adjustment for stock of work-in-process, finished goods, recoveries for sales of scrap, wastage etc. shall be made. When the appellants have availed Cenvat credit on the entire input/raw materials consumed, their contention that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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