2015 (12) TMI 802 - AT - Central Excise

Valuation - Determination of assessable value - Clearances of ore concentrate made by Rajpura Dariba Mines unit of the respondent company - Held that - While determining the assessable value under Rule 6 (b) (ii) of the Central Excise Valuation Rules, 1975, the dispute is only about the profit margin to be added. While according to the respondent, the profit margin of 10 per cent has been correctly adopted, according to the department s profit margin to be adopted for determination of value under Rule 6 (b) (ii) must be the overall profit earned by the Respondent company and accordingly since during 1999-2000, the respondent company in its balance sheet had reflected the profit 15.24 per cent, it is this profit which is sought to be adopted by the department for determining the assessable value of ore concentrate - there is no justification for adopting the profit margin of the respondent company during 1999-2000 in its balance sheet and that the profit margin to be adopted is the profit margin in respect of the ore concentrate unit only - Decided against revenue.

Summary

Issues:
Dispute over assessable value of ore concentrate for captive consumption based on profit margin determination under Rule 6 (b) (ii) of Central Excise Valuation Rules, 1975.

Detailed Analysis:

1. Background of the Dispute:
The case involves a dispute regarding the assessable value of ore concentrate cleared for captive consumption by a company engaged in zinc manufacturing. The disagreement primarily centers around the determination of the profit margin to be added while calculating the value under Rule 6 (b) (ii) of the Central Excise Valuation Rules, 1975.

2. Adjudication by Assistant Commissioner:
The Assistant Commissioner, in a common order-in-original, upheld the adoption of a 10% notional profit margin by the company despite incurring losses during the relevant period. The department disagreed, arguing that the overall profit margin of 15.24% reflected in the company's balance sheet for 1999-2000 should be used for valuation.

3. Appeals and Commissioner's Decision:
The company appealed against the cost of production adopted, while the department challenged the profit margin determination. The Commissioner (Appeals) dismissed the department's appeal to increase the profit margin to 15.24% and remanded the matter regarding the company's appeal. The department then appealed against the Commissioner's decision.

4. Arguments and Counter-Arguments:
The department contended that the profit margin should reflect the overall company profit, citing a Tribunal judgment. In contrast, the company argued that the profit margin should be specific to the ore concentrate unit, not the company as a whole, referencing a different Tribunal decision in their favor.

5. Tribunal's Decision:
After considering both sides' submissions and previous rulings, the Tribunal found that a similar issue had been decided in favor of the company in a previous case. Relying on the precedent set by the Larger Bench's judgment, the Tribunal held that the profit margin specific to the ore concentrate unit should be adopted for valuation purposes. Consequently, the Revenue's appeal was dismissed.

This detailed analysis outlines the key aspects of the legal judgment, focusing on the dispute over the assessable value of ore concentrate and the determination of the profit margin under the Central Excise Valuation Rules.