2005 (9) TMI 170 - AT - Central Excise

Summary

Issues: Central Excise Valuation dispute regarding assessable value based on sale price to buyer.

In the judgment by the Appellate Tribunal CESTAT, New Delhi, the dispute revolved around the Central Excise Valuation of medicines manufactured by M/s. Amstrin Pharma Pvt. Ltd. and supplied to M/s. Abbott Laboratories (I) Limited. Initially, the sale price of M/s. Abbott Laboratories (I) Limited was considered as the assessable value for Central Excise duty payment. However, from a certain date, the manufacturer started assessing the medicines based on the sale price to M/s. Abbott Laboratories (I) Limited. The lower authorities concluded that the sale price of the buyer should continue to be the assessable value.

The appellant/assessee argued that they supplied the medicines to M/s. Abbott Laboratories (I) Limited at negotiated prices, emphasizing that for excise assessment, the assessable value should be based on the transaction value between the manufacturer and the first buyer. They contended that sale prices at later tiers of trade should not influence excise assessment.

The Revenue, on the other hand, contended that the parties were related and that the sale price of the manufacturer was determined by the buyer. It was also highlighted that the buyer supplied raw materials, but beyond these facts, there was no substantial evidence to support the claim of a relationship between the parties.

The Tribunal analyzed the case considering that both the manufacturer and the buyer were limited companies. It was noted that the sale price was agreed upon between the parties and there was no indication that it was a favored price or did not encompass all production costs. The Tribunal reiterated that a fully commercial price constitutes the assessable value, even if all goods are sold to a single party. The fact that the buyer supplied raw materials was deemed irrelevant, as in cases of job work, the assessable value is determined by adding job charges to the cost of materials provided by the buyer. The Tribunal concluded that the appellant/assessee correctly adopted their sale price as the assessable value, and the sale price of the buyer was not relevant for Central Excise duty assessment purposes.

As a result, the appeal of the Revenue was dismissed, while the appeals of the assessee were allowed, providing them with consequential relief if applicable.