Order Date – 16 March 2023

Parties: M/s. ITC Limited Vs Commissioner of GST & Central Excise

Facts –

• The Appellant, M/s. ITC Limited, manufactures packaging materials made out of paper and paper board which manufactured at appellant’s Bhadrachalam unit. The same were transferred to its cigarette factories, where it used for the manufacture of cigarettes, and also to the appellant’s units engaged in other business which used the same in the manufacture of their respective goods like food, agarbathi, clothes, etc.
• It was alleged that during the period 2004-2007 there is a differential duty liability arises on such transfer.

Issue –

• Whether the appellant had correctly valued the paper received from Bhadrachalam unit?

Order –

• The Tribunal observed that the issue dealt with in the impugned order have already been decided by this Tribunal, for the earlier period in which it was held that in the case of Inter-unit transfer of goods for captive consumption, the actual cost of production (100% of the cost of production), of the raw material procured from the Bhadrachalam unit of the appellant [excluding the notional loading under Rule 8 – 15% / 10%] is the cost of raw material in the hands of the Chennai unit, for determining the cost of production of packaging material manufactured by the Chennai unit.
• It was further held that the percentage of loading on such cost of production, mandated by provisions of Rule 8 for remittance of excise duty by the Bhadrachalam unit cannot however be considered as comprised in the cost of the raw material consumed for manufacture of packaging material and thus constituting the cost of production at the Chennai unit.
• Considering the above decision, the impugned order is set aside and appeal is allowed.