2025-VIL-744-CESTAT-KOL-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Special Rate of Value Addition, Freight Subsidy, Abnormal Waste - Appellant applied for a higher rate of Value Addition on actual basis for the Financial Year 2008-09, claiming a higher rate of Refund of Duty on actual Value addition based on the previous year's Balance Sheet, after duly Certified by the Statutory Auditors at 82.29% - Commissioner rejected the application and recalculated the actual Value addition at 36.81% - - Whether the Ld. Commissioner was justified in including the Freight Subsidy received by the appellant from the Government to arrive at the actual cost of freight and the cost of raw material - HELD - As per para 5.1.9 of CAS-6 of the Cost Accounting Standards, any subsidy received by the appellant is not includable in the material cost. The statutory auditor has rightly arrived at the freight cost while determining the special rate by excluding the freight subsidy received by the appellant. Thus, Ld. Commissioner was not justified in including the freight subsidy to arrive at the freight cost – As there is no ground for rejecting value addition arrived by the appellant on the basis of the Certificate issued by the Statutory Auditor, the appellant is eligible for the value addition of 82.29% as claimed by them on the basis of the Statutory Auditor's certificate and other supporting documents - the impugned order is set aside and the appeal is allowed - Whether the Ld. Commissioner was justified in including the cost of abnormal waste that has arisen during the course of initial process of manufacturing, to arrive at the cost of raw material - HELD - As per para 5.4 of CAS-6, the material cost of abnormal scrap/defectives should not be included in the material cost but treated as loss after giving credit to the realisable value of such scrap/defectives. The appellant has rightly excluded the cost of abnormal waste in determining the value addition - the appellant is eligible for the value addition of 82.29% as claimed by them on the basis of the Statutory Auditor's certificate and other supporting documents.
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GSTAT Appeal filed wrongly...
By CA Vivek Jalan

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