MRF LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) HEARD both sides.

(2.) THE representative of the appellant submitted that he is not contesting differential duty amount of Rs. 43,45.022/ - in appeal No. 2652/02 for the period related to 1/7/2000 to 31/12/00. He, however, submitted that as regards the penalty amount of Rs. 10 lakhs, the same is being contested by him. As regards the appeal No. 2653 of 2002, the Ld. representative submitted that he is contesting the duty amount of Rs. 2,97,633/ - and the penalty amount of Rs. 75,000/ -. He inter alia contented that since the excisable goods were consumed captively, the advertising expenses are not to be included in the assessable value. The period involved in both the cases is the same i.e. 1/7/00 to 31/12/00. He submitted that the issue involved in both the appeals is the same. His contention is that new valuation Rules 2000 came into existence w.e.f. 1/7/00 (as per notification No. 45/2000 dtd 30/6/00). According to Rule 8 read with para 21 of Boards Circular No. 354/81/2000/TRU dtd 30/6/00, the assessable value of captively consumed goods will be taken at 115% of the cost of manufacture of goods, based upon general principles of costing of a commodity. According to para 13 of AS2, expenses of selling and distribution should not be included in the cost of production of captively consumed goods from 1/7/00 onwards. His contention is that the Ld. Commissioner instead of following the above guidelines, has followed the Boards old Circular No. 258/92/96/CX dtd 30/10/96 and included certain unrelated expenses such as advertising expense and also included profit margin of 15% as prescribed in the new Rules. His contention is that the Ld. Commissioner should have adopted profit margin as per Boards Old Circular which prescribed certain formula for ascertaining the profit margin. He submitted that the profit margin is much less than 15% as it is only 4.4%. Therefore the duty demanded is not correctly worked out. In support of his contention he relied on the following decisions.

(3.) AS regards the appeal No. 2652, his contention is that there is no violation of the Rule 173Q as well as Section 4 of the Central Excise Act 1944. Therefore, imposition of penalty of Rs. 10 lakhs is not warranted and not justified. As regards appeal No. 2653, his contention is that since the Nylon Rubberised Tyrecord Warp sheets have been used captively in the manufacture of exempted ADV Tyres, the duty of Rs. 2,97,633/ - is not payable.