1995 (10) TMI 137 - AT - Central Excise

Summary

Issues: Valuation of excisable goods for duty purposes under Section 4 of the Central Excises and Salt Act, 1944; Determination of comparable goods for valuation under Rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975; Exclusion of transportation charges under Section 4(2) of the Act.

In this judgment by the Appellate Tribunal CEGAT, New Delhi, the appellant, a manufacturer of Staple Fibre, challenged the valuation of Sulphuric Acid for captive consumption during the period from 10-11-1976 to 31-8-1978. The dispute arose post the removal of tariff value, requiring ad valorem valuation. The Collector adopted the price of Sulphuric Acid produced by another manufacturer at Kota, deducting filling charges, which was contested by the appellant. The appellant raised contentions regarding the method of valuation, consideration of relevant factors for determining comparable goods, and the exclusion of transportation charges under Section 4(2) of the Act.

The judgment delves into the provisions of Section 4 of the Act, which governs the valuation of excisable goods. It outlines two methods for valuation: based on goods actually sold and where normal price is not ascertainable. Rule 6(b) of the Valuation Rules applies when goods are not sold but used in production. It provides for valuation based on comparable goods' value or cost of production. The term "comparable goods" is not defined, necessitating a case-specific analysis. In this case, Sulphuric Acid produced by the Kota manufacturer was deemed comparable, considering quality and characteristics, despite differences in production volume and usage.

Regarding the determination of comparable goods under Rule 6(b)(i), the judgment emphasizes the need for adjustments based on relevant factors, including material characteristics and differences between goods. The Collector's consideration of adjustments, like a Rs. 5/- per ton deduction, was deemed appropriate. The appellant's argument on production volume differences was considered a factual matter requiring supporting evidence. The Tribunal granted the appellant an opportunity to present relevant materials to the Collector for consideration.

The judgment also addresses the exclusion of transportation charges under Section 4(2) of the Act. It clarifies that this provision applies when the price for delivery at a place other than the place of removal is known. In cases of captive consumption without sale or delivery, as in this scenario, the exclusion of transportation charges does not apply. Consequently, the impugned order was set aside, directing the Collector to reassess adjustments based solely on production volume differences. The decision allowed the appellant to present relevant evidence while maintaining the finality of other aspects decided by the Collector.

In conclusion, the appeal was partially allowed, focusing on the reconsideration of adjustments for comparable goods' valuation and clarifying the inapplicability of transportation charge exclusion in cases of captive consumption.