Excise – Cestat Chennai: In the case of inter-unit transfer of goods for captive consumption, 100% of the cost of production would be the cost of raw material of the another unit, and not 115%/100% – Appeal allowed [Order attached]
Order Date – 28 February 2023
Parties: M/s. ITC Limited Vs The Commissioner of Central Excise
- The Appellant, M/s. ITC Limited, procured raw material from its Bhadrachalam unit.
- Whether the cost production is correctly determined as per the Rule 8 of the Valuation Rules?
- The Tribunal observed that the matter was remitted by the Larger Bench for disposing of the matter in accordance with the conclusions arrived at by the Larger Bench. It was held by the Larger Bench in that case 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.
- Applying the dictum laid by the Larger Bench in its Interim Order the Tribunal held that the demand, interest and penalties in respect of the issue cannot sustain and requires to be set aside.