1997 (3) TMI 177 - AT - Central Excise

Summary

Issues:
1. Challenge to the Order-in-Appeal Nos. 127 to 129/87 passed by the Collector (Appeals) Central Excise, Madras.
2. Applicability of notional manufacturing profit on R.C.C. Poles.
3. Exemption from excise duty due to captive consumption.
4. Valuation of excisable goods under Rule 6(b) of the Valuation Rules.

Analysis:
1. The judgment concerns the challenge to the Order-in-Appeal Nos. 127 to 129/87 passed by the Collector (Appeals) Central Excise, Madras. The appellant, a Superintending Engineer at the Electricity Board, contested the orders confirming the imposition of notional manufacturing profit on R.C.C. Poles. The appellant failed to produce copies of all orders being challenged, but it was established that the Collector (Appeals) upheld the three orders-in-original passed by the Assistant Collector.

2. The issue of notional manufacturing profit arose as the Assistant Collector demanded a 10% profit addition to the assessable value of R.C.C. Poles manufactured and consumed by the Electricity Board. The appellant argued against this addition, claiming that as the Board did not sell the poles but used them internally, no profit was earned on their manufacture. However, the tribunal emphasized that under Rule 6(b) of the Valuation Rules, the value should include profits that would normally be earned on the sale of such goods. The tribunal highlighted that R.C.C. Poles are marketable products, and if sold, there would be a margin of profit, which the lower authorities estimated at 10%.

3. The appellant contended that as the R.C.C. Poles were exclusively used for statutory obligations by the Electricity Board and became part of the overhead lines upon installation, the levy of excise duty was unreasonable. However, the tribunal clarified that the adjudicating authority's role is to determine the excisability of goods and impose duty accordingly, not to assess the reasonableness of the levy. As R.C.C. Poles are marketable products, they are subject to excise duty regardless of internal consumption.

4. The valuation of excisable goods captively consumed was governed by Rule 6(b) of the Valuation Rules in this case. The appellant did not contest the application of Rule 6(b)(ii) for determining the assessable value. The tribunal explained that the value should be based on the cost of production, including profits that would be earned if the goods were sold. The tribunal noted that in similar cases where job workers manufactured R.C.C. Poles for Electricity Boards, there was a margin of profit, indicating the marketability of the product. The tribunal upheld the lower authorities' decision to add a 10% profit margin to the assessable value based on the lack of evidence to deem this estimate unreasonable.

In conclusion, the tribunal declined to interfere with the Collector (Appeals) orders and dismissed the appeals, affirming the imposition of notional profit on the valuation of R.C.C. Poles consumed internally by the Electricity Board.