BRAKES INDIA LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellants M/s. Brakes India Ltd. manufactures and clears iron castings of Chapter Sub -heading 7325.10 of the Central Excise Tariff Act. They cleared unmachined castings to their sister concerns situated at various places in Chennai on payment of duty. The appellants had determined the value of the castings so cleared by cost construction method in terms of Rule 6(b)(ii) of the Central Excise Valuation Rules, 1975 (CVR). On scrutiny of the records of the appellants it was tentatively found by the authorities that for clearance of unmachined castings during September 1996 to February 1997 the appellants had not determined the value correctly and had followed a wrong method. A Show Cause Notice was issued on 3.4.1997 proposing to determine the value in accordance with the provisions of Rule 6(b)(ii) of the CVR and to recover an amount of Rs. 17,14,866/ - which appeared to have been short -paid by the appellants.

(2.) ADJUDICATING the above Show Cause Notice the original authority found that the only dispute regarding the valuation of unmachined castings cleared to the sister units of the appellants related to addition of cost relatable to invisible loss suffered by the raw materials in the process of manufacture of castings. The appellants used various additives in the process which got consumed in the process of manufacture. The original authority decided that the cost of the additives and the cost of raw material relatable to the invisible loss had to be taken into account for determining the cost of unmachined castings cleared by the assessee. In the impugned order the Commissioner (Appeals) found that the issue before him was the correct method of determination of the value of unmachined castings cleared for consumption by the sister units of the appellants. He examined the alternative methods canvassed by the assessee as well as the Revenue as follows: