2016 (8) TMI 708 - SC - Central Excise

Valuation - captive consumption of goods - whether Rule 6(b)(ii) as per appellant or Rule 6(b)(i) as per Revenue of the Central Excise (Valuation) Rules, 1975 would be applicable - period in question is October, 1997, to June, 2000 - Held that - the Revenue took into consideration sales made by the assessee to its customer and passed orders on that basis. However, it transpires that sale of goods to the said Goan company by the assessee was only up to June, 1997. Thereafter, no supplies were made and, therefore, for the period in question, the price on which the sales were made to Goan company could not have been the basis. The Tribunal, on the other hand, found that during this period, there was a solitary sale transaction which was at ₹ 100 per k.g. in December, 1997. In these circumstances, since that was the only comparable price available with the Tribunal, we find nothing wrong in adopting that solitary sale as the basis for arriving at the valuation for the period in question as well. - Decided against the appellant

Summary

Issues: Valuation of goods for excise duty - Applicability of Rule 6(b)(i) vs. Rule 6(b)(ii) of Central Excise (Valuation) Rules, 1975

In this judgment, the Supreme Court addressed the issue of the valuation of goods for excise duty from October 1997 to June 2000. The main contention was the applicability of Rule 6(b)(i) versus Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975. The Tribunal initially ruled in favor of Rule 6(b)(i) over Rule 6(b)(ii), which led to a dispute regarding the appropriate valuation method.

Under Rule 6(b)(i), the price of comparable goods needed to be considered for valuation purposes. The Revenue relied on sales made by the assessee to M/s. Courtaulds Packaging (India) Pvt. Ltd., Goa, until June 1997, to determine the valuation. However, as no supplies were made to the Goan company after June 1997, the Tribunal found that these sales could not form the basis for valuation between October 1997 and June 2000.

During the period in question, there was only captive consumption of goods, with a solitary sale transaction recorded at ?100 per kg in December 1997. Given the lack of comparable prices, the Tribunal deemed this solitary sale as a suitable basis for determining the valuation for the entire period under consideration.

Ultimately, the Supreme Court dismissed the appeal, affirming the Tribunal's decision to adopt the solitary sale transaction as the basis for valuing the goods for excise duty from October 1997 to June 2000. The judgment clarifies the importance of accurate valuation methods in excise duty matters and highlights the significance of applicable rules in determining the valuation of goods for tax purposes.