2016 (12) TMI 220 - AT - Central Excise

Valuation - metallic - reduction of value of bought out items supplied with manufactured goods - Held that - We note, on careful consideration of the facts of the case, the Revenue has not contested the impugned findings on any legal basis. We find that the respondent had contract for supply of complete Fuse Switch Unit comprising of three components. Only one component is manufactured by them, the other two are bought out and supplied directly to the consignee. We find no reason as to why the respondent should not have a profitable trading of the two items bought and added to final consignment. In the absence of any allegation of manipulated or incorrect invoice/ transaction details, the reasoning adopted by the Commissioner (Appeals) cannot be faulted. There is no legal requirement that any bought out items are to be considered only on cost basis. The Revenue also did not support such plea with any legal basis - appeal dismissed - decided against Revenue.

Summary

Issues: Valuation of excisable items in relation to traded items; Allowance of profit margin on traded items; Legal basis for valuation determination.

In this case, the Revenue appealed against an order by the Commissioner (Appeals) regarding the valuation of metallic items cleared by the appellant in the manufacture of Fuse Switch Units. The dispute centered around whether the profit margin on traded items should be added to the assessable value of the excisable metallic items. The Revenue contended that no profit margin should be allowed on traded items, as they are available to all and do not involve expertise. However, the Tribunal noted that the appellant had contracts for supplying complete Fuse Switch Units, with only one component manufactured by them and the other two bought out. The Tribunal found no reason to disallow a profit margin on the traded items, especially since there were no allegations of incorrect invoicing or transactions. The Tribunal emphasized that there is no legal requirement to consider bought out items only on a cost basis, and the Revenue failed to provide any legal basis for their argument.

The Tribunal observed that the Revenue did not contest the findings of the Commissioner (Appeals) on any legal basis. The Tribunal held that the appellant should be allowed a profit margin on the traded items added to the final consignment, as there was no evidence of manipulation or incorrect invoicing. The Tribunal dismissed the Revenue's appeal, stating that there was no merit in their argument. Consequently, the appeal was dismissed, and the original order regarding the valuation of the excisable items in relation to the traded items was upheld.

In conclusion, the Tribunal's decision emphasized the importance of considering profit margins on traded items when determining the assessable value of excisable items. The Tribunal highlighted the lack of legal basis for disallowing profit margins on traded items and upheld the original order favoring the appellant. The judgment serves as a reminder of the need for a comprehensive and legally sound basis for valuation determinations in excise duty cases.