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Chackolas Spinning and Weaving Mills Ltd v/s Commissioner of Central Excise, Cochin


Company & Directors' Information:- K K P SPINNING MILLS PRIVATE LIMITED [Active] CIN = U17111TZ1993PTC004731

Company & Directors' Information:- N R U SPINNING MILLS LIMITED [Active] CIN = U17111TZ1994PLC005591

Company & Directors' Information:- K D R SPINNING AND WEAVING MILLS LIMITED [Active] CIN = U17110DL1981PLC012864

Company & Directors' Information:- R G SPINNING MILLS PRIVATE LIMITED [Active] CIN = U17111TZ2004PTC011274

Company & Directors' Information:- P K P N SPINNING MILLS PRIVATE LIMITED [Active] CIN = U17111TZ1981PTC001034

Company & Directors' Information:- K R V SPINNING MILLS PRIVATE LIMITED [Active] CIN = U17111TZ1990PTC002716

Company & Directors' Information:- V R SPINNING MILLS PRIVATE LIMITED [Active] CIN = U17111TZ1979PTC000836

Company & Directors' Information:- K A S SPINNING MILLS PRIVATE LIMITED [Strike Off] CIN = U17111TZ1990PTC002955

Company & Directors' Information:- P S G SPINNING MILLS PRIVATE LIMITED [Active] CIN = U17111TZ1994PTC005234

Company & Directors' Information:- C P SPINNING MILLS PRIVATE LIMITED [Active] CIN = U17111TZ1994PTC005257

Company & Directors' Information:- N S C SPINNING MILLS PRIVATE LIMITED [Active] CIN = U17111TZ2004PTC011093

Company & Directors' Information:- K T SPINNING MILLS PRIVATE LIMITED [Active] CIN = U17111TZ1990PTC002678

Company & Directors' Information:- J G SPINNING MILLS PRIVATE LIMITED [Active] CIN = U17111TZ1991PTC011033

Company & Directors' Information:- S K WEAVING PRIVATE LIMITED [Active] CIN = U17115DL2004PTC129457

Company & Directors' Information:- S P SPINNING MILLS PRIVATE LIMITED [Active] CIN = U17111TZ1979PTC000862

Company & Directors' Information:- S K WEAVING PRIVATE LIMITED [Not available for efiling] CIN = U17119GJ1998PTC034952

Company & Directors' Information:- J G SPINNING MILLS PRIVATE LIMITED [Not available for efiling] CIN = U18101WB1991PTC050845

Company & Directors' Information:- M B S SPINNING MILLS PRIVATE LIMITED [Active] CIN = U17111TZ1994PTC005005

Company & Directors' Information:- R D SPINNING MILLS LIMITED [Active] CIN = U17115PB1989PLC009763

Company & Directors' Information:- T K S SPINNING MILLS PRIVATE LIMITED [Active] CIN = U17111TZ1988PTC002117

Company & Directors' Information:- R K WEAVING PRIVATE LIMITED [Active] CIN = U01711TZ2002PTC010192

Company & Directors' Information:- K P M SPINNING MILLS PRIVATE LIMITED [Active] CIN = U17111TZ1995PTC006011

Company & Directors' Information:- J. C. SPINNING MILLS PRIVATE LIMITED [Active] CIN = U17121TG2011PTC073799

Company & Directors' Information:- R R R SPINNING MILLS INDIA PRIVATE LIMITED [Active] CIN = U17111TZ1990PTC002745

Company & Directors' Information:- G P M SPINNING MILLS PRIVATE LIMITED [Active] CIN = U17110PB2005PTC028070

Company & Directors' Information:- P K WEAVING MILLS PRIVATE LIMITED [Active] CIN = U51311RJ2000PTC016748

Company & Directors' Information:- R R SPINNING MILLS PRIVATE LIMITED [Active] CIN = U17111TZ1980PTC000984

Company & Directors' Information:- B B S M SPINNING MILLS PRIVATE LIMITED [Strike Off] CIN = U17111TZ1990PTC002914

Company & Directors' Information:- P A SPINNING MILLS PVT. LTD. [Not available for efiling] CIN = U17111TN1989PTC018288

Company & Directors' Information:- M K G SPINNING MILLS PRIVATE LIMITED [Strike Off] CIN = U17115TZ1990PTC002952

Company & Directors' Information:- M P SPINNING AND WEAVING MILLS PRIVATE LIMITED [Active] CIN = U17120MH1974PTC017191

Company & Directors' Information:- V G WEAVING PRIVATE LIMITED [Active] CIN = U74899DL1994PTC063738

Company & Directors' Information:- M S SPINNING MILLS PRIVATE LIMITED [Active] CIN = U17219PB1995PTC017064

Company & Directors' Information:- N G SPINNING MILLS PVT LTD [Active] CIN = U21010GJ1981PTC004505

Company & Directors' Information:- A A K. SPINNING MILLS PRIVATE LIMITED [Strike Off] CIN = U17111TZ1995PTC005766

Company & Directors' Information:- G P G SPINNING MILLS PRIVATE LIMITED [Strike Off] CIN = U17111TN1987PTC014844

Company & Directors' Information:- P P WEAVING MILLS PRIVATE LIMITED [Strike Off] CIN = U17115TZ2003PTC010602

Company & Directors' Information:- E A P SPINNING MILLS PRIVATE LIMITED [Strike Off] CIN = U17111TZ2005PTC011782

Company & Directors' Information:- N S K SPINNING MILLS PRIVATE LIMITED [Under Process of Striking Off] CIN = U17111TZ1994PTC004816

Company & Directors' Information:- R P K SPINNING AND WEAVING MILLS PVT LTD [Strike Off] CIN = U17119CH1987PTC007371

Company & Directors' Information:- R. A. SPINNING MILLS PVT LTD [Strike Off] CIN = U17115PB1988PTC008852

Company & Directors' Information:- K P K SPINNING MILLS PRIVATE LIMITED [Strike Off] CIN = U17111TZ1961PTC000431

Company & Directors' Information:- D S R WEAVING MILLS PRIVATE LIMITED [Strike Off] CIN = U29262TZ1988PTC002255

Company & Directors' Information:- H K SPINNING MILLS PVT LTD [Active] CIN = U17111PB1986PTC006672

Company & Directors' Information:- A V S SPINNING MILLS INDIA PRIVATE LIMITED [Strike Off] CIN = U17111TZ2004PTC011275

Company & Directors' Information:- K S SPINNING MILLS PRIVATE LIMITED [Active] CIN = U17299HR2021PTC092277

Company & Directors' Information:- O P K SPINNING MILLS PRIVATE LIMITED [Strike Off] CIN = U17120DL1988PTC032165

Company & Directors' Information:- P N M SPINNING MILLS PVT LTD [Strike Off] CIN = U17111TN1981PTC008870

Company & Directors' Information:- J K K SPINNING MILLS PRIVATE LIMITED [Strike Off] CIN = U17111TZ1981PTC001085

Company & Directors' Information:- R K SPINNING MILLS PRIVATE LIMITED [Strike Off] CIN = U17100KA1995PTC018864

Company & Directors' Information:- J K R SPINNING MILLS PRIVATE LIMITED [Strike Off] CIN = U17111TZ1995PTC006781

Company & Directors' Information:- V K K SPINNING & WEAVING MILLS PRIVATE LIMITED [Strike Off] CIN = U18101TN1979PTC007760

Company & Directors' Information:- N H SPINNING AND WEAVING PVT LTD [Strike Off] CIN = U17119PB1995PTC015906

Company & Directors' Information:- K R WEAVING MILLS PRIVATE LIMITED [Active] CIN = U17291UP2015PTC068120

Company & Directors' Information:- P. D. R. SPINNING MILLS PRIVATE LIMITED [Strike Off] CIN = U17112AP2006PTC052124

Company & Directors' Information:- INDIA SPINNING AND WEAVING COMPANY LIMITED [Dissolved] CIN = U99999MH1919PTC000580

    Civil Appeal Nos. 7180-7184 of 2005

    Decided On, 16 July 2015

    At, Supreme Court of India

    By, THE HONOURABLE MR. JUSTICE A.K. SIKRI & THE HONOURABLE MR. JUSTICE ROHINTON FALI NARIMAN

    For the Appellant: M. P. Vinod, Advocate. For the Respondent: K. Radhakrishna, Sr. Advocate, A.K. Panda, Sr. Advocate, Tara Chandra Sharma, Ritesh Kumar, R.K. Verma, B.K. Prasad, Advocates.



Judgment Text

1. The only question of law involved in these appeals is as to whether the provision of Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975 (hereinafter referred to as 'the Valuation Rules') are applicable to the case at hand or not.

2. The facts in brief are as follows: The appellant company is engaged in the manufacture of cotton yarn, woven fabrics of cotton, staple fibre yarn and woven fabrics falling under Central Excise tariff headings 5205, 5209, 5510 and 5514 respectively of the Schedule to the Central Excise Tariff Act. The products manufactured by the appellant are leviable to payment of excise duty. The appellant has filed declaration in this behalf with the excise department. It is the admitted case of the appellant that the appellant has been captively using certain counts of yarn produced by them in the manufacture of unprocessed fabrics, which were exempted from the payment of duty. Since the yarn was not sold by the appellant but was consumed captively in the manufacture of fabrics, the question of valuation thereof arises while determining the excise duty that was payable on the manufacture of yarn. The respondent-excise department valued the same by applying the provision of Rule 6(b) (ii) of the Valuation Rules.

3. The relevant provisions of this Rule, as it existed, at the relevant time reads as under:-

'6(b) where the excisable goods are not sold by the assessee but are used or consumed by him or on his behalf in the production or manufacture of other articles, the value shall be based-

(i) on the value of comparable goods produced or manufactured by the assessee or any other assessee....

(ii) if the value cannot be determined under sub-clause (i), on the cost of production or manufacture including profits, if any, which the assessee would have normally earned on the sale of such goods.'

4. As pointed out above, the yarn has been captively consumed by the appellant. In the production/manufacture of unprocessed fabrics, Rule 6(b)(ii) directly applies to such cases where the excisable goods are not sold but are used or consumed captively. Under clause (i) of Rule 6(b), the value is to be based on the value of comparable goods produced or manufactured by the assessee or any other assessee. Since there was no such commodity or material available to show the value of any chargeable goods, the case was covered under sub-rule (ii) of Rule 6(b). That is, thus, the only provision under which the value could be determined. The only statement of the appellant is that since it was incurring losses in the production of yarn in the previous year it did not include any notional profit while dealing with price of goods under Rule 6(b)(ii) by the Department. That cannot be accepted inasmuch as sub-clause (ii) of Rule 6(b) does not deal with the situation where profits should be actually earned which is clear from the language 'which the assessee would have normally earned on the sale of such goods'. Thus, the notional profits could be taken into consideration and added while arriving at the value of captive material. This is exactly the exercise that was undertaken by the Department and has been upheld by the CESTAT. We may point out that

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ten per cent notional profit was added which has been found to be reasonable by the CESTAT relying upon the judgment in Union Carbide India Ltd. vs. CCE, Calcutta [2003 (158) ELT 15]. We thus do not find any error in the impugned order passed by the CESTAT. 5. These appeals, therefore, in our opinion, have no merit and are accordingly dismissed.
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