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TMI Blog2001 (3) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... h the request that it be placed before the Larger Bench for disposal and decision. As an interim order we waive pre-deposit of the duty confirmed and the penalties imposed." 2.We have heard learned Counsel representing the appellants M/s. Raymonds Limited and Premal Ichhaporia and the learned DR. 3.Specific provisions relating to valuation of captively consumed goods are contained in Rule 6(b) of Central Excise Valuation Rules. We read the provision to facilitate a proper understanding of the issue. "6(b) where the excisable goods are not sold by the assessee but are used or consumed by him or on his behalf in the production or manufacture of other articles, the value shall be based." (i) On the value of the comparable goods produced or manufactured by the assessee or by any other assessee; provided that in determining the value under this sub-clause, the proper officer shall make such adjustments as appear to him reasonable, taking into consideration all relevant factors and in particular, the difference, if any, in the material characteristics of the goods to be assessed and of the comparable goods; (ii) If the value cannot be determined under sub-clause (i), on the cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of captively consumed goods presents no insurmountable problem to manufacturers. The provision relating to inclusion of "profits, if any" as provided in the rule is capable of being implemented without much difficulty. Both sides also agreed that the profit required to be added in determining the assessable value of captively consumed goods is the gross profit (and not net profit) which would be earned by the assessee. They have submitted that this position remains settled by the decision of the Tribunal in the case of West Coast Paper Mills Ltd. v. CCE - 1996 (81) E.L.T. 403. 6.Section 4 of Central Excise Act, 1944 along with Central Excise Valuation Rules, 1975 contain the provisions for the valuation of excisable goods. Sub-Section (a) of Section 4(1) relates to valuation of goods which are sold. It stipulates that value of such goods for the purpose of charging of duty of excise shall be deemed to be the normal price that is to say the price at which such goods are ordinarily sold by the assessee. Thus, in the case of goods which are sold, value for the purpose of charging duty of excise is the normal sale price of such goods. Sub-section 4(1)(b) relates to cases where "such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are of no relevance for determining the assessable value of captively consumed goods. 7.The "profit, if any", to be taken into account while determining value under Rule 6(b)(ii) is the profit that the assessee "would have normally earned on the sale of such goods". It is clear from the words of the Rule that the profit is not the actual profit earned but profit that the assessee would have earned. A manufacturer earns his profit normally from the sale of the goods manufactured by him. In the case of captively consumed goods, since there is no sale, profit is not actually earned. The profit relatable to the captively consumed goods is transferred to and remains included in the profit earned on the sale of the final product into which the captively consumed goods merged. Therefore, the profit if any, in the manufacture of captively consumed goods has to be a projected profit. Both the sides have submitted before us that projection of profit from the manufacture of captively consumed goods is generally done by the industry and there are generally accepted principles governing such costing. Therefore, what is required to be done while determining the assessable value of captively co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold. Instead, are transferred to other units for processing. The issue involved is the valuation of the fabrics so cleared from Jalgaon unit for further processing to their own other units. Since the goods were being captively consumed, they filed a Price List effective from 11-3-1998 in respect of the fabrics manufactured at the Jalgaon unit. The value of the goods was determined based on the cost of production method and addition of 3.34% was also made towards profit. The duty paid in the Jalgaon unit was claimed by the appellant as Modvat credit in the other units as the fabrics manufactured in the Jalgaon unit was an input in the manufacture of final product in the other units. Show cause notice dated 1-1-1999 was issued proposing to increase the element towards profit from the original 3.34% to 30.6%, which was found to be the gross profit for the textile division for 1998-99. This was done on the basis that the profit originally added by the appellant was the overall profit of the appellant from the manufacture of many products, while for the purpose of valuation of fabrics, only the profit of the fabrics division was required to be included. The impugned adjudication order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jalgaon unit and the profit earned from the production of fabrics at the Jalgaon unit alone were liable to be taken into account while the assessment originally carried out and ordered in the impugned order taking into account the cost of production for the textile division which include other factories and the profit from the entire textile division. The learned Counsel submitted that if reassessment of the goods is made correctly (taking into account cost of production at the Jalgaon unit and the profit) the appellant assessee would be eligible for refund and would not be liable for any further payment. He submitted that a reassessment would be of no consequence to either side inasmuch as readjustment of credit taken at the other units of the assessee would flow from further payment of duty or refund of duty. The learned Counsel also submitted that duty demand, at least for part of the period, would also be time-barred as this is not a case involving any suppression of facts which would permit the Revenue to invoke the extended period as available under proviso to Section 11A(1) of the Central Excise Act. The appellants had declared full facts in their price declaration. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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