2009 (9) TMI 383 - AT - Central Excise

Valuation- the appellants factories are located in Pondicherry, Mumbai and Bhuvaneshwar jurisdiction wherein they manufacture dutiable plastic bottles for packing of Ujala , which is exempted. The department has adopted the value in respect of the bottles made in Mumbai for the Pondicherry unit s production under Rule 6(d)(i) of the Central Excise (Valuation) Rules, 1975 disregarding the claim for valuation under Rule 6(b)(ii). The department has also rejected the deduction prayed for by the appellants in respect of cap and stopper as the value of bottles made in Mumbai include the cost of cap and stopper whereas the bottles made in Pondicherry and Bhuvaneshwar are made without cap and stopper according to the ld. Counsel. Held that- when the value of bottles produced in Bhuvaneshwar is available, the same is required to be adopted under Rule 6(b)(i) and the assessments are required to be done accordingly. Accordingly we set aside the impugned order and remand the matter to the original authority for determining the value of the bottles produced in Pondicherry on the basis of the value of the comparable bottles produced by the appellants in Bhuvaneshwar. The appeal is thus partly allowed.

Summary

Issues: Valuation of dutiable plastic bottles for packing 'Ujala' produced in different locations.

In this case, the appellant's factories in Pondicherry, Mumbai, and Bhuvaneshwar manufacture dutiable plastic bottles for packing 'Ujala,' an exempted product. The dispute arose when the department adopted the value of bottles made in Mumbai for the Pondicherry unit's production under Rule 6(d)(i) of the Central Excise (Valuation) Rules, 1975, instead of considering the claim for valuation under Rule 6(b)(ii). The department also rejected the deduction prayed for by the appellants in respect of cap and stopper, as the value of bottles made in Mumbai included the cost of cap and stopper, while those made in Pondicherry and Bhuvaneshwar were without cap and stopper. The lower appellate authority disallowed the deduction claimed for cap and stopper, citing lack of evidence regarding the inclusion of their cost in the Mumbai production. The appellants had only submitted a Chartered Accountant's certificate. However, it was acknowledged that bottles made in Pondicherry and Bhuvaneshwar were comparable as they were made without cap and stopper.

The Central Excise (Valuation) Rules, 1975, define value under Section 4 of the Act, which can be determined under Section 4(i)(a) or Section 4(i)(b). The Rules establish a hierarchy, requiring that if the value can be determined under Rule 6(b)(i), it should be exhausted before applying Rule 6(b)(ii) directly. Rule 6(b)(i) allows for the determination of value based on comparable goods produced by the assessee or another assessee. In this case, the value of bottles produced in Bhuvaneshwar, where cap and stopper were not included, was deemed comparable to those produced in Pondicherry. Therefore, the Tribunal remanded the matter to the original authority for determining the value of the bottles produced in Pondicherry based on the value of comparable bottles produced in Bhuvaneshwar. The original authority was directed to recompute the duty based on this valuation and also examine the issue of limitation raised before the Tribunal. The appeal was partly allowed, setting aside the impugned order and providing the appellants with a reasonable opportunity of hearing before the fresh order is passed.