AICMAS: CAS-4

                                            CESTAT NEW DELHI

2013 (291) E.L.T. 268 (Tri. – Del.)

HINDUSTAN LEVER LTD. Versus COMMISSIONER OF C. EX., BHOPAL

Valuation under Rule 8 of the of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 – Detergents and Sulphonic acid supplied to sister concern – Held that:- Cost of production as certified in the Chartered Accountant certificate dated 7-9-2002 i.e. Rs. 52,000/- per M.T. for Surf Excel, the detergent powder and Rs. 62,000/- per M.T. for sulphonic acid should have been adopted, while according to the appellant this costing had been wrongly done on the insistence of the department by including the head office expenses and marketing and distribution expenses which are not required to be included in the costing in terms of CAS-4 – Costing certificate are not in the CAS-4 format and accordingly it cannot be said as to whether the costing had been done in terms of CAS-4 costing standard or not – Matter has to be remanded for de novo adjudication after determining the cost of production of both the products during each financial year during the period of dispute strictly in terms of CAS-4 standard and in that format by a Cost Accountant appointed by the department and in the light of the Cost Accountant’s certificate regarding the cost of production of the products, in question, during each financial year, the matter must be re-adjudicated.

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Case Laws Discussion

Nirma Limited V/s CCE Vadodara

A study of the Judgement passed by Hon’ble Supreme Court of India on 9th October 2015 vide Civil Appeal No. 3621/2007 dated 9th October 2015 read with Nirma Limited V/s CCE Vadodara-2005(8) TMI337-CESAT, Mumbai Order No.- A/1650-1653/2005-WZ/C-III dated 26th August 2005 on Valuation of Excisable Goods brings about the following:

(a) Determination of Cost of Production is to be made as per CAS-4;
(b) Interest, Depreciation( not part of relevant production) and Profit Margin can not be taken into consideration while arriving at Cost of Production.

Provisions considered:–

(a) Rule 8 & Rule 9 of the Valuation Rules 2000;
(b) Section 4(1)(a), 4(1)(b), 11A (1) of the Central Excise Act;
(c) Rule 6(b)(i) of the Valuation Rules, 1975
(d) Order No. 692/8/2003-CX dt. 13-2-2003
(e) Rule 173C; and
(f) F.No. 258/92/96-CX dt. 30-10-1996

Contributed by:

CMA Rakesh Singh
B.Com (Hons), FCMA,FIV,MIMA,MICA

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  1. Guidance Notes on Valuation under Rule 8,9 & 10 of the Valuation Rules 2000 (Under Revision).
  2. CAS-4 Presentation (under revision)
  3. FAQ on CAS-4