1998 (10) TMI 164 - AT - Central Excise

Summary

Issues:
1. Classification of "Copper Powder" under Tariff Item 26A(8) or Tariff Item 68.
2. Addition of notional profit in the assessable value of captively consumed goods.

Classification Issue:
The appeal concerned the assessment of duty on "Copper Powder" manufactured and consumed by the appellant, which contained copper, lead, and tin. The impugned order classified the product as copper powder under Tariff Item 26A(8). The appellant argued that it should be classified under Tariff Item 68, citing Explanation I to Tariff Item 26A, which refers to the classification of alloys where copper predominates by weight. The appellant contended that the product was a mixture, not an alloy, and therefore should be classified differently. The Tribunal held that Explanation I applied to alloys only, not mixtures, and since copper constituted 70% to 80% of the mixture, it upheld the classification under Tariff Item 26A(8).

Valuation Issue:
Regarding the addition of notional profit in the assessable value, the appellant argued against the 10% profit addition, stating that their unit had been incurring losses. The Tribunal noted the appellant's claim of losses and referred to a previous decision where it was held that profit should not be added when the unit is facing losses. Consequently, the Tribunal directed the adjudicating authority to reconsider the valuation issue, taking into account the appellant's financial data to determine whether notional profit should be added. The appellant succeeded on this ground, and the case was remanded for further valuation consideration.

In conclusion, the Tribunal upheld the classification of the "Copper Powder" under Tariff Item 26A(8) based on the predominance of copper in the mixture. It also directed a reevaluation of the assessable value to determine the necessity of adding notional profit, considering the appellant's claim of continuous losses.