2001 (1) TMI 281 - AT - Central Excise

Summary

Issues:
1. Methodology for fixing assessable value of blended yarn.
2. Interpretation of Rule 6(b)(i) of the Valuation Rules for assessment of goods based on the value of comparable goods.
3. Assessment based on the price of comparable goods and adjustments for differences in material characteristics.

Issue 1: The dispute in this case revolves around the methodology to be followed for fixing the assessable value of blended yarn, which is captively consumed in the manufacture of fabric. Initially, the jurisdictional Assistant Commissioner assessed the goods based on the cost of manufacture. Upon appeal, the Commissioner (Appeals) directed assessment based on the assessable value of comparable goods produced by other manufacturers, with suitable adjustments if the goods were not identical.

Issue 2: The Revenue appealed against the Commissioner (Appeals) order of remand, arguing that the blended yarn produced by the respondents was unique, with differences in quality, making Rule 6(b)(i) of the Valuation Rules inappropriate. The respondents' counsel contended that Rule 6(b)(i) covered the assessee's case, allowing adjustments for differences in material characteristics between the goods under assessment and comparable goods.

Issue 3: The respondents manufactured blended yarn from poly wool and poly viscose yarns, resulting in variations in the characteristics of the blended yarn due to different ratios of the yarn varieties used in blending. The Commissioner directed assessment based on the price of comparable goods, with adjustments as per Rule 6(b)(i) for differences in material characteristics. The Tribunal upheld the Commissioner's order, stating that the variation in material characteristics did not justify ignoring Rule 6(b)(i) and resorting to assessment based on the cost of production.

In conclusion, the Tribunal found that the impugned order and directions were in line with Rule 6(b)(i) of the Valuation Rules. Therefore, the appeal by the Revenue was dismissed, affirming the assessment based on the price of comparable goods with necessary adjustments for material characteristics.