2026-VIL-360-CESTAT-CHD-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Fixation of Special Rates for Value Addition - The appellant, a manufacturer of pesticides, claimed special rates for value addition for the years 2010-11 to 2016-17 under Notification No. 56/2002-CE, as amended. The Commissioner rejected the appellant's applications, finding that the value addition figures/claims were not supported by reliable data and the eligibility condition of actual value addition being at least 115% of 34% was satisfied only for four products - Whether the value to be considered for calculating the special rates should be the MRP under Section 4A of the Central Excise Act, 1944 or the actual sales value as per the financial records - HELD - The explanation under the notification clearly states that the actual value addition is to be calculated based on the financial records of the preceding financial year, taking into account the sale value of the goods excluding taxes. The sale value under the notification is the actual sale price and not the MRP - the value that needs to be considered for the purposes of the fixation of special rate as per the Notification Nos.19/2008-CE dated 27.03.2008 and 34/2008-CE dated 10.06.2008 is the actual sale value i.e. the actual amount realised by the appellants in the sale of the goods minus the taxes paid etc and not the MRP as per Section4A of the Central Excise Act, 1944 - the impugned order is set aside and the Commissioner to sanction the special rates claimed by the appellant for the four eligible products - the appeal is allowed - Whether the foreign exchange loss should be included in the cost of raw materials - HELD - The foreign exchange loss, being directly linked to the expenses incurred on raw materials, should be included in the cost of raw materials for the purpose of calculating the value addition - Whether the Commissioner was justified in rejecting the special rate applications on the ground of variations in the value addition rates over the years - HELD - The appellants had provided plausible reasons for the variations, such as the seasonal nature of the industry, product registrations and approvals, and raw material dependency on China. The Tribunal found that the Commissioner's rejection of the applications on this ground was unwarranted.
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