1998 (7) TMI 422 - AT - Central Excise

Summary

Issues:
1. Inclusion of the cost of dies in the assessable value of printed pouches.
2. Apportionment of the cost of dies over the manufactured pouches.

Issue 1: Inclusion of the cost of dies in the assessable value of printed pouches:
The appeal challenged an Order-in-Appeal upholding the inclusion of the cost of dies realized separately from customers in the assessable value of printed pouches. The appellant argued that the dies' cost was not additional consideration for the pouches and should not attract Rule 5 of the Central Excise (Valuation) Rules, 1975. They contended that the dies' cost should be amortized over the quantity ordered by customers and that there was no provision in Central Excise law for adding the cost of dies. The Department argued that the cost of dies should be added to the assessable value based on precedents where similar costs were included in the assessable value of other products. The Tribunal upheld the Department's position, stating that the dies' cost had been separately recovered from customers and needed to be included in the assessable value of the pouches manufactured using them.

Issue 2: Apportionment of the cost of dies over the manufactured pouches:
The Tribunal addressed the question of whether the entire cost of the dies should be added to the assessable value of one lot of printed pouches or apportioned over multiple lots. Referring to Circular No. 17/4/96-CX issued by the Central Board of Excise & Customs, the Tribunal held that the cost of the dies should be spread over the lots of pouches manufactured using them. The principle of apportionment was likened to the value of patterns used in the foundry industry. The Tribunal emphasized the need for a realistic estimate of the expected life and capability of the dies to determine the proportionate value to be added to the printed pouches' value. Consequently, the Tribunal set aside the impugned order and remanded the matter for a fresh decision by the Assistant Commissioner, directing a reevaluation of the cost apportionment based on the Tribunal's observations.

In conclusion, the Tribunal upheld the inclusion of the cost of dies in the assessable value of printed pouches and provided guidance on the apportionment of this cost over the manufactured pouches, emphasizing the need for a realistic estimate and proportionate value addition.