1997 (11) TMI 308 - AT - Central Excise

Summary

Issues:
Determining the assessable value of Calcined Petroleum Coke (CPC) manufactured on job-work basis, inclusion of Excise Duty paid on raw material, applicability of Rule 6(b)(i) vs. Rule 6(b)(ii) of Valuation Rules, interpretation of comparable goods, impact of Proforma Credit on assessable value.

Analysis:
The case involved M/s. India Carbon Ltd. manufacturing CPC out of Raw Petroleum Coke (RPC) on their own account and on job-work basis for M/s. Hindalco Industries Ltd. The dispute centered around the assessable value of CPC manufactured on job-work basis using raw material supplied by Hindalco. The appellants claimed deduction of Excise Duty paid on RPC, citing Proforma Credit availed. The Assistant Commissioner included the duty in assessable value, while the Commissioner (Appeals) directed assessment under Rule 6(b)(i) instead of Rule 6(b)(ii) based on comparable goods' value (Rule 7). The Tribunal considered the appeal challenging this decision.

The appellants argued that Excise Duty on raw material with Proforma Credit should not be included in final product cost, citing a Tribunal decision in Dai Ichi Karkaria Ltd. case. They contended that the Commissioner (Appeals) erred in applying Rule 6(b)(i) instead of Rule 6(b)(ii). The appellants emphasized the binding effect of precedent decisions and sought allowance of the appeal based on settled law.

The Respondent, however, argued that Rule 6(b)(ii) is applicable, considering the goods manufactured by the appellants themselves as most comparable. They distinguished the Dai Ichi Karkaria Ltd. case, stating it involved intermediate goods for captive consumption, unlike the present case. The Respondent urged rejection of the appeal.

The Tribunal analyzed the provisions of Rule 6(b)(i) and (ii) and determined that Rule 6(b)(i) should apply in this case. They rejected the appellants' argument regarding Excise Duty inclusion, citing the Dai Ichi Karkaria Ltd. case's context. The Tribunal found the decision not applicable due to factual distinctions. Ultimately, the Tribunal upheld the Commissioner (Appeals)'s order, rejecting the appellants' appeal based on the correct application of valuation rules and lack of merit in their arguments.