2004 (11) TMI 450 - AT - Central Excise

Summary

Issues:
Valuation rules for excisable goods cleared to a Service Centre for pest control services.

Analysis:
The appeals revolve around the issue of determining the valuation rules applicable when excisable goods are cleared to a Service Centre for pest control services. The assessee manufactures and clears pesticides/insecticides in retail packs to wholesale dealers for onward retail sales. Some products in bulk packs are sent to the Service Division for use in pest control services. The department argues that the assessable values for bulk pack removal to the Service Centre should be calculated on a pro rata basis by comparing retail pack prices. However, the assessee has been discharging duty based on Cost Construction Rule using Chartered Accountants certificates without questioning them.

The Central Excise Act, 1944, Section 4(1)(a) and 4(1)(b) are invoked in the appeals. The Revenue contends that goods cleared for sale in the market and those used in the Service Division cannot be considered comparable goods. Circulars and rules are cited to support the argument that the valuation should be based on reasonable means consistent with the principles of the Act. The nature of goods, though identical in terms of quality, differ in packaging and usage, leading to the application of specific valuation rules.

The judgment emphasizes the application of Rule 6(b)(ii) and Rule 8 of the Central Excise Valuation Rules, 2000, for determining the value of goods removed to the Service Centre. The concept of consumption by the Service Centre is crucial, with the term "consumption" interpreted broadly to include any form of utilization. Captive consumption by the Service Centre is established, warranting the application of Cost Construction Rules for valuation. The judgment rejects the Revenue's appeals and upholds the assessee's position on the valuation methodology.

In conclusion, the appeals are disposed of based on the interpretation and application of the relevant valuation rules for excisable goods cleared to a Service Centre for pest control services. The judgment clarifies the principles governing the valuation process and highlights the significance of considering the specific circumstances of removal and utilization of goods in determining their assessable value.