Non-Compliance with Cost Accounting Standard as per CAS-4: CESTAT directs Re-adjudication [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) Ahmedabad Bench directed re-adjudication as there was non-compliance with cost accounting standards as per CAS-4.

The contention of the Adjudicating Authority is that even though crane was cleared within the factory the same is clearance and attract Central Excise Duty. Accordingly, the appellant has evaded the Excise Duty eligible on the crane manufactured and cleared clandestinely within the factory.

Anil Gidwani, Advocate who appeared on behalf of the appellant, submitted that, the crane manufactured and used captively is within the factory for manufacturer of excisable goods i.e. pre-fabricated building as same is cleared on payment of duty and that the said transaction is clearly exempted under Notification No. 67/95 - CE dated 16.03.1995. Therefore, there cannot be demand of duty on the manufacture and use of crane within the factory of the production.

The counsel further submitted that even the cost of manufacture of crane is on hypothetical basis without establishing that the said goods were used in the manufacturing of crane on that count also demand is not sustainable and that the entire demand is time barred as the entire case is arising on scrutiny of the records of the appellant.

A Two-Member Bench comprising Ramesh Nair, Judicial Member and Raju, Technical Member observed that “We also find that the appellant has vehemently argued about the demand being time barred on the basis that the appellant has not suppressed any fact from the department mainly for the reason that the goods manufactured by the appellant was not cleared from the factory but was available in the factory. This aspect also needs to be reconsidered in detail.”

“As regards the valuation of the goods we find that adjudicating authority has not followed the cost accounting standard as per the CAS-4 to arrive at the value of the goods for discharging Excise Duty in terms of Rule 8 for captive consumption. Therefore, this aspect needs to be reconsidered. In view of our above observation, we are of the opinion that, the entire matter on all the issues needs to be reconsidered by the adjudicating authority afresh” the Tribunal concluded.

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