Decided on February 03,2015

Greaves Cotton Ltd. Respondents


P.K.JAIN - (1.)THIS is an appeal filed by the Revenue against the order of the Commissioner (Appeals). Brief facts of the case are that the respondents were manufacturing 'diesel engine model FL -400' and were clearing the same to a related party viz. M/s. Piaggio Greaves Ltd., Baramati.
(2.)The period of dispute is 1 -7 -2000 to 31 -8 -2001. They were paying the duty on a value arrived on cost construction basis, i.e. as per Section 4(1)(b) of the Central Excise Act, 1944' read with Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.
During the period they had paid the duty on the basis of a Cost Accountant's certificate dated 7 -8 -2000. Later on, it was found that another report of the cost auditor was available for the period ending 30th September, 2001. The amounts indicated in the two certificates under the head (i) 'Material Cost' and (ii) 'Other costs/overheads' were different. In the certificate dated 7 -8 -2000, the material cost was indicated as Rs. 20,111/ - while in the cost audit report, the same was indicated as Rs. 13,934/ -. In respect of other cost/overheads, in the certificate, dated 7 -8 -2000, the amount indicated was Rs. 4,566/ - while in the case of cost audit report, the amount was Rs. 7,381/ -. A demand notice was issued taking the material cost as per certificate dated 7 -8 -2000 and other cost/overheads as per cost audit report.

(3.)THE respondent's contention is that the material cost has come down as in the beginning, for few months, they were using the imported material while later on, they started using the indigenous material. The respondent's another contention is that if the cost audit report dated 30 -9 -2001 is taken into account, which represents the actuals for the whole period, the total cost of production works out to Rs. 21,315/ - as against Rs. 24,677/ - on which they have paid duty. Yet another contention of the respondent is that certificate dated 7 -8 -2000 was based upon Estimation as per the situation at that time while certificate of cost auditor is based upon actuals for the whole period. We have gone through the order of the Commissioner (Appeals) and in our view, it is not appropriate on the part of the Revenue to take the material cost as per certificate dated 7 -8 -2000 and take the "other cost/overheads" on the basis of certificate dated 30 -9 -2001. In our view, the certificate dated 30 -9 -2001 represents the correct cost of production and we find that the said cost of production is less than the assessable value on which the respondent had paid duty. Under the circumstances, we do not find any merit in the appeal of the Revenue and accordingly the same is dismissed.
(Operative part pronounced in Court).


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