2000 (9) TMI 503 - AT - Central Excise

Summary

Issues:
Assessable value determination based on raw materials supplied by customers, applicability of Central Excise Valuation Rules, 1975, comparison of ingots manufactured for customers and on own behalf, inclusion of burning loss in assessable value calculation.

Assessable Value Determination:
The case involved a dispute over the correct assessable value of Steel Ingots manufactured by the appellants using raw materials supplied by their customers. The Revenue contended that the assessable value should include the cost of production of raw materials, conversion charges, and manufacturing profit based on the Supreme Court's decision and Rule 6(b)(ii) of the Central Excise Valuation Rules, 1975. On the other hand, the appellants argued that they correctly paid duty based on the prices of ingots manufactured from their own purchased raw materials, claiming no difference in assessable value. The authorities rejected the appellants' contention, emphasizing that Rule 6(b)(i) and 6(b)(ii) apply to captively consumed goods, leading to demands being confirmed based on the cost of raw materials, accounting for burning loss.

Comparison of Ingots Manufactured:
The Tribunal analyzed the contention that the ingots manufactured by the appellants for customers and on their own behalf were not comparable. Despite the appellants' reliance on the normal price of their ingots, the Tribunal found no evidence to support the comparability of the two types of ingots. The assessable value of ingots manufactured on job work basis was higher than those manufactured by the appellants themselves, indicating a potential quality difference. As per the Supreme Court's decision in a similar case, the Tribunal concluded that the assessable value should be determined accordingly.

Inclusion of Burning Loss:
The Assistant Commissioner highlighted that the value determined based on manufacturing cost, profit, and raw materials consumption was higher than what the appellants discharged as duty liability. This difference arose because the appellants excluded burning loss from their assessable value calculation. The Tribunal agreed with the Assistant Commissioner, emphasizing that the total cost of raw materials at the start of the manufacturing process must be considered, not just the raw materials present in the final product. The appellants did not dispute this position or provide evidence to refute it, leading the Tribunal to reject the appeal.

In conclusion, the Tribunal upheld the demands against the appellants, emphasizing the correct determination of assessable value based on the Supreme Court's decision, the applicability of Central Excise Valuation Rules, and the inclusion of burning loss in the calculation. The comparison of ingots manufactured for customers and on own behalf played a crucial role in establishing the assessable value, ultimately leading to the rejection of the appeal.