2017 (2) TMI 889 - AT - Central Excise

Valuation - whether marketing expenses should be includible in the assessable value of excisable goods arrived at on cost construction basis or otherwise? - Held that - This Tribunal in assessee s own case have categorically held that marketing expenses is not includible in the assessable value arrived at under Rule 6(b)(ii) of Central Excise(Valuation) Rules, 1975 - appeal dismissed - decided against Revenue.

Summary

Issues: Valuation of excisable goods - Inclusion of marketing expenses in assessable value.

Analysis:

The case involved a dispute regarding the inclusion of marketing expenses in the assessable value of excisable goods arrived at on a cost construction basis. The respondent, engaged in manufacturing various parts, supplied goods to their units for captive use or to vendors/job-workers on a loan basis. The department initiated proceedings contending that marketing expenses should be added to arrive at the assessable value. The Commissioner(Appeals) allowed the respondent's appeal, stating that marketing expenses are not includible for valuation under the Central Excise Valuation Rules. The Revenue filed an appeal against this decision.

During the proceedings, the Revenue reiterated its grounds of appeal, while the Respondent argued that the issue had already been settled in their favor by a previous Tribunal order on the same issue. The Tribunal examined both sides' submissions and the record, focusing on whether marketing expenses should be included in the assessable value of excisable goods on a cost construction basis.

The Tribunal referred to its previous orders dated 24-10-2005 and 28-11-2005, where it categorically held that marketing expenses are not includible in the assessable value under the relevant rules. It cited a case involving a show cause notice regarding re-determination of valuation, where it was established that marketing expenses are not part of the cost of production for valuation purposes. Additionally, the Tribunal referred to a decision in the case of Raymonds Ltd vs CCEX Aurangabad, emphasizing that profit or loss from other activities is not relevant in determining assessable value for captively consumed goods.

Based on the precedent set in the respondent's own case and the principles established in previous orders and relevant case law, the Tribunal rejected the Revenue's appeal. It upheld the impugned order, dismissing the Revenue's appeal and disposing of the case accordingly. The decision was pronounced in court on 23/02/2017, concluding the matter in favor of the respondent based on established legal principles and precedents.