2007 (2) TMI 68 - AT - Central Excise

Valuation(Central Excise) Revenue contended that for purpose of valuing the final product, the value of the input(chassis) would be the value under Rule of CEVR,2000 while assessee can t agree with it Matter reffered to the Larger bench

Summary

Issues involved:
Interpretation and application of rule 8 of the Central Excise Valuation (Determination of Price Excisable Goods) Rules, 2000 in the context of valuing final products in job work scenarios.

Detailed Analysis:

1. Valuation of Final Product:
The central issue in the appeals revolves around determining the valuation of the final product, a motor vehicle, manufactured through job work by Bhagirath Coach and Metal Fabricators Pvt. Ltd. for Eicher Motors Ltd. The dispute arises from differing perspectives on whether the value of the input, such as the chassis, should be based on the actual cost or the value calculated under rule 8 of the Central Excise Valuation Rules.

2. Legal Precedents and Interpretation:
The appellants rely on legal precedents, such as the decision in Bhilwara Processors Ltd. v. Commissioner of Central Excise, Jaipur-II, to support their argument that the assessable value should include processing charges and profit based on the cost of inputs. Additionally, references are made to Circulars and Supreme Court judgments like Ujagar Prints and Pawan Biscuits Co. to emphasize the principles guiding valuation under the Central Excise Act.

3. Rule 8 and Cost of Production:
Rule 8 of the Central Excise Valuation Rules stipulates that when goods are used for production or manufacture of other articles, their value should be 115% of the cost of production. The Tribunal notes that the statutory valuation under rule 8 should be the basis for determining the value of inputs used in manufacturing the final product, aligning with the Supreme Court's position on valuing processed fabric in previous cases.

4. Reference to Larger Bench:
Given the significance of the issues raised in the appeals, the Tribunal decides to refer the matter to a Larger Bench for final disposal. The key questions to be addressed include whether the value of inputs under rule 8 should be considered for valuing the final product and whether the actual cost of inputs or the rule-based valuation should be used in assessing the product's value.

In conclusion, the judgment highlights the complexity of valuing goods manufactured through job work arrangements and the need for clarity on the application of valuation rules under the Central Excise Act. The decision to refer the appeals to a Larger Bench underscores the importance of resolving these issues for future regulatory clarity and consistency in excise valuation practices.