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TMI Blog2023 (10) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... ffort has been made to adopt the broad principles of CAS-4 to arrive at the cost of production. It was also observed by the special team that the cost incurred against the expenditure under unabsorbed overheads has not been considered while calculating the cost of production. It is observed that when the Special team submitted their report and made an observation regarding non-inclusion of certain elements in cost of production as per CAS-4 principles, the Appellant submitted the clarifications/explanation wherein they categorically stated that the cost of production has been arrived at as per the principles adopted in CAS- 4 - There is nothing on record to Show that there were any deficiencies in the Report of the Special Audit Team. Neither the Authority who constituted the Special Audit Team nor the Reviewing Commissioner has expressed any lacunae in the Report. The Lower authority has gone by the Report and finalized the pending Provisional Assessments - the Deputy Commissioner has finalized the provisional assessments by adopting the principles of CAS-4 to arrive at the cost of production and the assessable value for the purpose of payment of duty has been correctly deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sputed period. 2. While finalizing the provisional assessments, the Deputy Commissioner has arrived at the differential duty of Rs.3,99,41,490/- on two counts of valuation. He worked out the cost of production on the basis of CAS-4 and the assessable value has been arrived at on 110% of the cost of production during the period 1982-June 2004-05. In the impugned order, the notional cost of production has been added to the tune of 15% instead of 10% for the period 2000 to 2003. However, the Appellant has not pressed for any relief against this issue, in the present appeal. 3. The Revenue has not accepted the method of valuation adopted by the Adjudicating authority in the Order-in-Original dated 12.12.2007 and observed that, as per CAS 4, cost of production shall consist of material consumed, direct Wages and Salaries, direct expenses on works overhead, quality control cost, research and development cost, packing cost, administrative overheads related to production. The Deputy Commissioner while deciding the cost of production as per CAS-4 principles, examined documents pertaining to different years on test basis supplied by ITC Ltd., Munger and observed that broad principles o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any analysis whatsoever to the assessee's operating figures, I am reluctantly compelled to remand this portion of the impugned order for fresh adjudication. The assessee is directed to furnish the details required to ascertain their compliance with CAS 4 and CAS 2 norms. The Department shall cause necessary verification of the details (not confine to the text book definitions only) so furnished by the assessee and satisfy itself about the correctness of the same. For example it has been simply stated in the impugned order that In view of the above, as far as question of inclusion of unabsorbed overhead and other elements in cost of production is concerned, the contention and explanation submitted by the assessee appears to be reasonable . Neither the assessee nor the department has examined any of these factors, from both the sides there is only a reference to the theoretical definitions and their scope. This will not suffice for the requirements of an order for finalization of provisional assessment. Therefore, I have no other option but to remand this portion of the impugned order. 5. In their submissions, the Appellant stated that that unabsorbed overhead is the overhea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to note that a conscious decision was made by the Chief Commissioner for finalization of the provisional assessments without cost audit under section 14A and he constituted a Special Team of Central Excise Officers for the said purpose. The Commissioner (Appeals) failed to appreciate that in fact the Department had secured professional expertise by having several sittings with the Cost Accountant who had audited the Appellant s figures. When all the figures supplied by the Appellant were duly certified by an independent Cost Accountant and were further scrutinized by a Special Team constituted by the Chief Commissioner, it was not open to the Commissioner (Appeals) to doubt the correctness of the figures. This is more so when the Department had not even pointed out a single error in the workings. The Commissioner (Appeals) failed to appreciate that neither the Authority who constituted the Special Team nor the Reviewing Commissioner had pointed out any lacunae in the Report of the Special Team. The Appellant submitted that the impugned order having exceeded the scope of the appeal by the Department is liable to be set aside in limine on this ground alone. Accordingly, they prayed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e figures supplied by the Appellant were duly certified by an independent Cost Accountant and were further scrutinized by a Special Team constituted by the Chief Commissioner, it was not open to the Commissioner (Appeals) to doubt the correctness of the figures. 11. We observe that when the Special team submitted their report and made an observation regarding non-inclusion of certain elements in cost of production as per CAS-4 principles, the Appellant submitted the clarifications/explanation wherein they categorically stated that the cost of production has been arrived at as per the principles adopted in CAS- 4. We observe that the Order-in-Original passed by the Deputy Commissioner has taken into account all such elements at the time of finalization of provisional assessment. We also observe that the finalization of the Provisional Assessment has been concluded on the basis of the Department s own Special Audit Team. There is nothing on record to Show that there were any deficiencies in the Report of the Special Audit Team. Neither the Authority who constituted the Special Audit Team nor the Reviewing Commissioner has expressed any lacunae in the Report. The Lower authority ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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