Custom, Excise & Service Tax Tribunal
Cce, Chennai vs M/S. Eveready Industries (I) Ltd on 19 April, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
E/379/2004
(Arising out of Order in Appeal No. 14/2003 (M-I) (D) dated 27.11.2003 passed by the Commissioner of Central Excise (Appeals), Chennai).
For approval and signature
Honble Ms. JYOTI BALASUNDARAM, Vice President
Honble Dr. CHITTARANJAN SATAPATHY, Technical Member
_________________________________________________________
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copy of the Order.
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CCE, Chennai : Appellant
Vs.
M/s. Eveready Industries (I) Ltd., : Respondent
Appearance Shri A.B. Niranjan Babu, SDR, for the appellants Shri K.S. Venkatagiri, Adv., for the respondents CORAM Honble Ms. JYOTI BALASUNDARAM, Vice President Honble Dr. CHITTARANJAN SATAPATHY, Technical Member Date of hearing : 19.04.2011 Date of decision : 19.04.2011 ORDER No.________________ Per: Jyoti Balasundaram, The Revenue is aggrieved by the order of the Commissioner (A) who had upheld the order of the adjudicating authority regarding valuation of intermediate products manufactured and stock transferred by the assessees from Tiruvottiyur factory to Guindy factory during the period in dispute.
2. We have heard both sides. We find that the issue stands settled in favour of the assesees by Tribunals Final Order No. 542/10 dated 11.05.10. The relevant extract from the Tribunals Order is reproduced herein below:-
2. We have heard both sides. We find that the Commissioner (Appeals) has accepted the Cost Accountant certificate filed by the assessees, certifying the cost of material in accordance with the cost accounting standard-4 (CAS-4) which is the basis to be adopted as instructed by the CBEC. Covering letter of the Cost Accountant is reproduced herein below :-
Eveready Industries India Limited, National Carbon Plant at 1075, TH Road, Chennai are engaged in manufacturing dry cell batteries. In the course of manufacture of dry cell batteries, a number of mixes are prepared, two of which are AA Mix 915 and AA Mix 1015. they also manufacture AA cans. These, apart from being captively consumed, are also stock transferred to Guindy Plant.
For manufacturing the AA Mix, the company receives from its Navi Mumbai Plant, electrolytic manganese di-oxide (for short EMD Plant). This is dispatched on payment of duty by themed Plant and on receipt National Carbon Plant takes cenvat credit of the duty paid by EMD Plant.
The duty is paid by the EMD plant by determining the value for payment of duty as under :
a) Cost of production computed and certified by the cost auditor of the company.
b) Corporate overheads;
c) Notional deemed profit at 15% of cost of production + corporate overheads The above details are available in the Certificate dated 3.5.2003 issued by the Chartered Accountants M/s.Kalpesh Thakkar, Thane (Annexure 1).
The question is how to determine the value of AA Mix 915 type and 1015 type manufactured by National Carbon Plant, for the purpose of payment of duty since the same is not sold but transferred to their Guindy factory and consumed in the Guindy factory.
In terms of Rule 8 of Central Excise Valuation Rules, 2000, in such circumstances the value is to be determined based on cost of production + 15% notional margin.
In terms of Government of India, Department of Revenue Circular No.692/8/2003 Cx dated 13th February, 2003, the cost of production for the purpose of arriving at the assessable value of goods captively consumed is to be computed in accordance with CAS-4. This standard stipulates that the cost of production shall not include marketing costs, corporate overheads and interest.
While determining the cost of production at National Carbon Plant, the actual cost incurred is alone to be taken into consideration in respect of raw material received from Mumbai namely electrolytic manganese di-oxide. The corporate overheads and notional deemed profit taken into account for the limited purpose of computing the assessable value for payment of duty at Navi Mumbai Plant is not to be taken into account while working out the cost of production at National Carbon Plant. The same principle applies to the AA type Zinc calots received from their Guindy plant.
We had the benefit of the certificate issued by Chartered Accountants, M/s.Kalpesh Thakkar indicating the cost of production, corporate overheads and notional deemed profit for determining the assessable value of electrolytic manganese di-oxide cleared by EMD plant.
We had the benefit of the certificate issued by Chartered Accountants M/s.Rajendran Viji & Co. indicating the cost of production, corporate overheads and notional deemed profit for determining the assessable value of Zinc Calots for payment of duty by Guindy factory. Out of the same, AA Cans manufactured and cleared by the National Carbon Plant.
The company is maintaining cost accounting records as required under Section 209 (1) (d) of the Companies Act. We have relied on the cost accounting records certified by the companys Cost Auditors and other financial records. Based on the information and explanations given to us and on the basis of generally accepted cost accounting principles and practices followed by the industry, we have certified the cost of production. The cost of materials consumed includes materials transferred from other units of the company valued as per Cost Accounting Records maintained U/S 209 (1) (d), in accordance with Clause 6 of CAS 4. Certificate indicating the cost of AA Mix 915, AA Mix 1015 and AA Cans are enclosed duly verified and signed by us.
3. It is not the case of the department as seen from the appeal memorandum that as per CAS-4, the cost of material should be the assessable value. We also note that in the case of Union Carbide India Ltd. Vs Collector of Central Excise, Calcutta [2003 (158) ELT 15 (SC)], the apex court has held that in the case of captive consumption, the cost of production means actual cost of production together with notional profit. Assessees submission that this method is prescribed in CAS-4 and has been followed by them, is not controverted by Revenue. We, therefore, uphold the impugned order and reject the appeal. Cross-objection is only in the nature of comments upon/reply to the Revenues appeal and is hence dismissed.
3. In addition, we find that the Commissioner (A) has also held that the correct method is to adopt the cost of material during the year on actual basis and not on any notional basis or on average basis. This also represents the correct position in law and does not require any interference. Following the earlier order of the Tribunal cited supra, in the assessees own case and our finding that adoption of cost of material during the year is correct, we uphold the impugned order and reject the appeal.
(Order dictated and pronounced in the open Court)
(Dr. CHITTARANJAN SATAPATHY) (JYOTI BALASUNDARAM)
TECHNICAL MEMBER VICE PRESIDENT
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