2005 (9) TMI 420 - AT - Central Excise

Summary

Issues:
Dispute over valuation of yarn produced by the appellant - Whether yarn produced on job work basis should be valued based on sale price or cost of production.

Analysis:
The dispute in this case revolved around the valuation of yarn produced by the appellant, both for itself and as job work for others. The appellant paid duty for yarn manufactured for itself based on the sale price, while for yarn produced on a job work basis, the assessable value was determined by the cost of production. The Revenue argued that yarn produced on job work basis should also be assessed based on the sale price of yarn produced and sold, claiming they were identical. The Tribunal initially set aside the lower authority's order, citing the judgment in Ujjagar Prints v. UOI, which stated that goods manufactured on job work basis should be valued based on the cost of production. However, the matter was appealed to the Supreme Court, leading to a remand order for the Tribunal to determine the comparability of the goods and their prices.

Upon reviewing the record and hearing both sides, the Tribunal found that the two types of yarn were not comparable, as highlighted by the objections raised by the assessee. The objections pointed out significant differences in the types of yarn and the timing of comparisons made by the authorities. The appellant argued that yarn prices are subject to heavy fluctuation, making it inappropriate to compare prices from different periods without considering the time of removal. The Tribunal agreed with the appellant, noting that the lower authorities erred in considering the goods as comparable despite clear differences in categories like grey yarn and dyed yarn, as well as single yarn and doubled yarn.

The Tribunal further emphasized that the lower authorities did not account for the significant differences in the products or the timing of price fluctuations. Given the factual differences between the goods and the lack of proper consideration for relevant data, the Tribunal concluded that the goods were not comparable, and their prices were also not comparable. As a result, the impugned order was set aside, and the appeals were allowed in favor of the appellant, with any consequential relief granted accordingly.