2015 (9) TMI 621 - AT - Central Excise

Valuation - Determination of assessable value - clearing soaps in bulk to job-worker without marking MRP - Job worker in turn were packing the individual soaps in multi-piece packaging - Held that - Since there is no assessable value determinable in this case recourse to Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 has been done. It would appear that determination of assessable value has been done by resorting to Rule 4 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. Thought, rule 4 is not strictly applicable to the situation as it only factors in the time of clearance but no difference on account of packing. It is seen that none of the Rules 4 to 10 are applicable to this situation and resort to Rule 11 is to be made. - Revenue has already accepted the valuation of the goods cleared from M/s Hindustan Lever Ltd. on the basis of assessable value of similar goods (except for the packing material) cleared from the job-worker s premises. The only difference between the goods cleared from the appellant premises and their job-worker s premises is a packing. Therefore, it is only just to say that difference between the values of the two clearances is only the cost of packing material. Under Rule, 11 it would appear reasonable to allow the adjustment on account of cost of packing material as claimed by the appellant. - Decided in favour of assessee.

Summary

Issues: Valuation of multi-piece packs for duty assessment; Deduction of cost of carton in clearance; Applicability of Central Excise Valuation Rules.

Valuation of multi-piece packs for duty assessment:
The case involved M/s Hindustan Lever Ltd. clearing soaps to a job-worker, M/s Ashapura Industries, where individual soaps lacked MRP markings, but the multi-piece packs had higher MRPs crossed out for lower sales. The issue was whether duty should be levied based on the higher MRP on the multi-piece packs. The Circular No. 673/64/2002.CX clarified that for valuation of multi-packs, if individual items could be sold separately at their marked MRPs, then the aggregate MRP should be considered. The Dy. Commissioner relied on this circular to drop the duty demand. However, the Revenue later challenged this decision, arguing the circular's inapplicability and denying the cost deduction of the carton used by the appellant.

Deduction of cost of carton in clearance:
The Revenue sought to disallow the deduction of the carton cost claimed by M/s Hindustan Lever Ltd. in their clearance to M/s Ashapura Industries. The Commissioner (Appeals) allowed the appeal on the second ground, denying the cost deduction of the package. The appellant's assessable value was derived based on comparable goods' value cleared from the job-worker's premises, except for the carton cost adjustment, which the Revenue disputed.

Applicability of Central Excise Valuation Rules:
Since no determinable assessable value existed, the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 were invoked. While Rules 4 to 10 did not apply due to the packing difference, Rule 11 was utilized. Rule 11 allowed determining the value of excisable goods using reasonable means consistent with the Act's provisions. As the only variance between goods cleared from the appellant's and job-worker's premises was the packing, it was deemed justifiable to adjust for the packing material cost under Rule 11, leading to the appeal's allowance.

This judgment clarified the valuation approach for multi-piece packs, the deduction of packaging costs, and the application of Central Excise Valuation Rules when determining assessable values. The decision emphasized the importance of consistent valuation principles and justified adjustments based on reasonable means, ultimately allowing the appeal in favor of M/s Hindustan Lever Ltd.