- (1.) The issue involved in the present appeal relates to the alleged under valuation of Linear Alkyl Benzene (LAB) which is manufactured and cleared by the respondent-assessee herein to its sister units located in different places and is also used captively in the same factory where the said LAB is manufactured. It is not in dispute that this is the intermediary product which is used for the manufacture of Nirma Detergent products. It is also not in dispute that the respondent - assessee has been paying excise duty on this product. The only issue is about the valuation that was to be arrived at for the purposes of payment of excise duty on this product. We may also mention that the parties are ad idem that the costing of LAB is to be done as per Rule 8 of the Valuation Rules, 2000 which prescribes cost method.
(2.) The appellant-Department had issued five show-cause notices to the respondent herein for different periods alleging therein that the costing as done by the respondent - assessee was not in accordance with the method of costing and it resulted in under valuation and thus lesser payment of duty. The differential duty was, thus, demanded.
(3.) The respondent herein, on going through the formula of costing as suggested by the Department, objected to the inclusion of the items of costing which are as follows : 1997-98 1998-1999 1999-2000 (Rs./MT) (Rs./MT) (Rs./MT) Cost of production as per show cause notice (1) 51755.00 51799.00 51799.00 Less : Profit Margin (2) 8554.00 7883.00 7883.00 Less : Interest (3) 6943.00 9570.00 9570.00 (4)=(1)-(2)-(3) 36258.00 34346.00 34346.00 (-) Depreciation costs not includible 402.67 546.08 546.08 (-) Catalyst cost not includible (6) 333.18 365.34 365.34 (-) Catalyst cost not includible 190.50 1190.50 1190.50 (=) Interest Expenditure 0.00 623.38 623.38 (9)=(4)=(5)-(6)-(7)+(8) 35522.15 34057.96 34057.96 (+) Profit Margin @ 10% (10) 3552.22 34005.80 34005.80 Cost of production as per submissions (11) = (9) + (10) 37764.81 36154.20 36154.20 Value at which duty has been paid (12) 37700.00 37700.00 45000.00 (upto December) (1999) 46500 (From January 2000);