2006 (10) TMI 47 - AT - Central Excise

Valuation(Central Excise) Loan Licensee Goods manufactured by assessee on behalf of A who sold to M Assessee fix Rs.22.40 for goods but sold by M at Rs.124/- Approval of price list upheld

Summary

Issues:
1. Assessment of assessable value in relation to pharmaceutical products manufactured on a loan license basis.
2. Alleged discrepancy in pricing between manufacturer and seller.
3. Determination of related persons under Section 4(d) of the Central Excise Act, 1944.
4. Appeal against the approval of price lists by the Commissioner (Appeals).

Assessment of assessable value:
The case involved the manufacturing of pharmaceutical products by the respondents for another company on a loan license basis. The department raised concerns regarding a significant difference between the price declared for approval by the manufacturing company and the price at which the selling company was offering the same goods in the market. The Assistant Commissioner was expected to investigate the reason for this price variation before approving the price lists. However, the adjudicating authority found no financial transactions or interest flow between the two companies, concluding that they were not related persons as per Section 4(d) of the Central Excise Act, 1944. Consequently, the price lists were approved without any alteration.

Alleged pricing discrepancy:
The Revenue appealed the decision, contending that the pricing difference was unjustified. The Commissioner (Appeals) reviewed the case and upheld the approval of the price lists, dismissing the appeal. The Tribunal noted that no substantial evidence was presented to warrant the rejection of the approved price lists. It was emphasized that if a proper officer intended to alter the accepted price, supporting evidence must be provided. Since no such material was furnished in this case, the Tribunal found no grounds to interfere with the initial decision and consequently upheld the approval of the price lists, rejecting the appeal.

This judgment primarily addressed the assessment of assessable value for pharmaceutical products manufactured on a loan license basis, scrutinizing the pricing dynamics between the manufacturer and the selling company. The determination of related persons under the Central Excise Act, 1944 was crucial in establishing the legitimacy of the pricing structure. Ultimately, the Tribunal affirmed the approval of the price lists, emphasizing the necessity of concrete evidence to challenge accepted prices.