The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the provisional assessment of excise duty demand by the deputy commissioner on the manufacture of cigarettes under the principles of Cost Accounting Standards (CAS-4).
ITC Ltd, the appellant assessee are manufacturer of cigarettes and Packaging Materials like Shells, Slides, Printed Sheets Gold Printed Sheets, Hinged Lid Packets (HLPs), and Card cardboard outers (CBOs), and these packaging materials are cleared by them for their cigarette factories for captive consumption in the manufacture of cigarettes.
The assessee appealed against the order passed by the Deputy Commissioner related to the method of valuation adopted for the finalization of the provisional assessments for the disputed period.
J. P. Khaitan, Agnibesh Sengupta and Asit Kr. Hazra, the counsel for the assessee contended that as per CAS 4, the cost of production shall consist of material consumed, direct Wages and Salaries, direct expenses on works overhead, quality control cost, research and development cost, packing cost, administrative overheads related to production and the cost of production as per CAS-4 principles, examined documents on different years on test basis supplied by the assessee and observed that broad principles of CAS-4 had been followed.
Mukhopadhyay, the counsel for the department relied on the decisions made by the lower authorities.
The Bench observed that the order passed by the Deputy Commissioner had taken into account all such elements at the time of finalization of the provisional assessment and the finalization of the Provisional Assessment had been concluded based on the Department’s own Special Audit Team and there was nothing on record to show that there were any deficiencies in the report of the Special Audit Team.
The two-member bench comprising Muralidhar (Judicial) and Anpazhakan (Technical) upheld the method of valuation adopted by the adjudicating authority in the finalization of provisional assessment and quashed the order to the extent of remanding the matter for adjudication of the valuation matter afresh.
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