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TMI Blog2004 (7) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... e market value sought to be relied upon is not comparable to yarn captively consumed. There must be a specific finding on the existence of factors which rendered comparison impossible. The Commissioner holds that there is nothing on record to demonstrate that machinery for manufacture of yarn is the same, fibre is the same etc. and yet goes on to hold that therefore yarns are not comparable. Unless material existed for comparison, he could not have come to the conclusion that the yarns are not comparable. As regards dyeing - It is also noted that for the period from 16-3-1995 to 18-5-1995, dyed yarn was entitled to the benefit of exemption in terms of Notification No. 35/95-C.E., dated 16-3-1995. All these aspects are required to be considered afresh by the Commissioner. He is also to consider the time bar aspect once again in the light of the fact that he has held in the impugned order that extended period of limitation is not applicable in so far as yarn captively consumed for dyeing is concerned, since, once it is found that the department is aware that the appellants' unit is actually dyeing the yarn and show cause notices have been issued proposing recovery of duty at spin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roi, sales tax etc.; and (b) dropping the proposal for charging of interest under Sec. 11AB of the Central Excise Act, 1944. 2. The issues in the appeal filed by M/s. Ashima Denims Ltd. involve, determination of valuation of yarn for captive consumption and valuation of yarn purchased from outside for captive consumption after dyeing sizing and the applicability of extended period of limitation. 3. We have heard both sides. It is the contention of the manufacturer that for valuation of captively consumed yarn, unless the method prescribed under Rule 6(b)(i) is ruled out, Rule 6(b)(ii) cannot be applied straightaway and that the Commissioner has not given any clear finding as to why the comparable invoices submitted during investigation and adjudication cannot be accepted. The further submission is that administrative overheads in relation to activities other than manufacturing activities, interest and financial charges are not to be included in the valuation of yarn captively consumed as per Cost Accounting Standard 4 (CAS-4), which has been accepted by the Central Board of Excise Customs under Circular No. 692/08/2003-C.X., dated 13-2-2003. The appellants cited the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Valuation Rules has no application in the facts and circumstances of the present case [even though there is no dispute that for valuation of captively consumed yarn, Rule 6(b)(ii) cannot be applied straightaway unless Rule 6(b)(i) is ruled out] for the reason that the Commissioner has recorded a clear finding as to why invoices from other manufacturers submitted by the appellants during investigation and adjudication cannot be relied on. The Commissioner has found that the so called comparable yarn was on cone while the yarn manufactured by the appellants was on beam in dyeing-cum-sizing stage, and has also found that the quality of yarn depends on various factors such as (a) type of machine used (b) quality of cotton used, (c) twist per inch in yarn, (d) strength of the yarn etc. He submits that from the invoice of so called comparable goods submitted by the appellants, it could not be ascertained as to what types of machines were being used and what type of cotton was used by other manufacturers for making the yarn and in the absence of all these relevant details, the yarn covered by those invoices could not be compared with the quality of the yarn manufactured by the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consumption after dyeing-cum-sizing, the respondent submits that although the process of dyeing of yarn was deemed to amount to manufacture with effect from 1-3-1995 by incorporation in Note (1) to Chapter 52, even prior to that date, it was covered by the main definition of manufacture in Section 2(f) of the Central Excise Act. As for the valuation of such yarn, it also includes the cost of raw materials which have gone into making of such yarn viz. grey yarn which has been transformed into a new and identifiable product viz. dyed yarn after carrying out the process of dyeing and therefore, the valuation of dyed yarn has been correctly arrived at. The contention of the appellants that the demand on yarn purchased and dyed by the appellants and captively consumed thereafter should have been dropped on application of the same reasoning for dropping the demand on yarn manufactured by them and captively consumed after dyeing, is met by the Revenue by submitting that the appellants had never informed the department that they were purchasing yarn from outside for captive use after dyeing and the appellants further contention that the dyed yarn was entitled to exemption in terms of Notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e note that in the case of CCE, Bhopal v. Raymonds Ltd. [2001 (128) E.L.T. 94], it has been held that even if yarn differs in material characteristics, necessary adjustment can be made under Rule 6(b)(i) and yarn valued on the basis of comparable yarn. There is no clear finding of the Commissioner as to why yarn whose market value sought to be relied upon is not comparable to yarn captively consumed. There must be a specific finding on the existence of factors which rendered comparison impossible. The Commissioner holds that there is nothing on record to demonstrate that machinery for manufacture of yarn is the same, fibre is the same etc. and yet goes on to hold that therefore yarns are not comparable. Unless material existed for comparison, he could not have come to the conclusion that the yarns are not comparable. Further, the percentage of profit applied in the present case is that of the entire unit which includes sales of fabrics of various kinds. Percentage of profit can, however, only be taken with regard to the product in question and not the products of the entire unit as seen from Tribunal s decision in 2001 (129) E.L.T. 327 in the case of Raymonds Ltd. v. CCE, Aurangaba ..... 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