2017 (3) TMI 603 - AT - Central Excise

Valuation - whether the assessable value of bulk drugs cleared by the appellant to their sister unit should have been computed in terms of Rule 6 of the Valuations Rules? - Rule 6 of Central Excise Valuation Rues, 1975 - Held that - As per above Rule 6(b)(i) when the goods are not sold by the assessee but are used or consumed by the manufacturer himself or on his behalf in the production of other article, the value should be based on the value of comparable goods produced or manufactured by the assessee or by any other assessee and in such case value cannot be should computed on the cost of production including notional profit. As per the fact of the case there is no sale of the goods in question by the appellant, therefore value of comparable goods of other manufacturer has to be accepted as comparable price - appeal allowed - decided in favor of appellant.

Summary

Issues:
Valuation of bulk drugs cleared to sister unit, consideration of comparable price, applicability of DPCO price as comparable price, remand order directions, denial of DPCO price by adjudicating authority, appeal against denovo adjudication order.

Analysis:
The case involved the valuation of bulk drugs cleared by the appellant to their sister unit, where the department alleged under-declaration of value to the excise authorities. The adjudicating authority confirmed the demand of differential duty for a longer period, which was later dropped by the Tribunal in an earlier order. The Tribunal remanded the matter back to the Commissioner, directing consideration of comparable price for valuation. The appellant submitted the price of comparable goods charged by another company under DPCO, contending that DPCO price should be accepted as comparable price as per Tribunal's remand order. The Revenue reiterated the findings of the impugned order rejecting the DPCO price.

The Tribunal analyzed Rule 6 of the Central Excise Valuation Rules, emphasizing that when goods are not sold but used in production, valuation should be based on comparable goods' value. The Tribunal disagreed with the Commissioner's rejection of DPCO price as comparable, stating that DPCO price is acceptable as a normal sale price. Referring to a previous Tribunal decision, the Tribunal highlighted that DPCO prices were accepted for similar bulk drugs in the past, indicating the department's awareness of such pricing practices. The Tribunal found the Commissioner's order unsustainable on merit and barred by limitation, setting it aside and allowing the appeal.

The Tribunal's decision clarified that for determining comparable price, DPCO price should be accepted. The Tribunal set aside the impugned order and allowed the appeal, emphasizing the acceptance of DPCO price for valuation in the present case. The judgment was pronounced on 23/02/2017 by the Tribunal.