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2018 (3) TMI 395 - AT - Central ExciseValuation of intermediate product - Proteolysed Liver Extract and Pharma Reptone - Demands were raised against the Appellant by issue of show cause notices on the ground that as per section 4, the value of the goods shall be based on the value of the comparable goods or cost of production, if any - Held that - the same goods are being purchased by the Appellant from five different manufacturers. The Appellant for the purpose of valuation of such captively consumed goods has made the invoices of all such manufactures as basis, we do not find any reason not to accept such prices of other manufacturer as comparable goods prices - matter remanded back to the adjudicating authority to verify the facts once again and to pass a reasoned order by valuing the goods in terms of Rule 6 (b) (i) of Valuation Rules and to make such adjustments as appear to be reasonable - appeal allowed by way of remand.
Issues Involved:
Valuation of intermediate product for duty payment under Medicinal & Toilet Preparations Act based on prices of comparable goods, dispute over comparability of goods, application of Rule 6 (b) (i) and Rule 6(b) (ii) for determining cost of production. Analysis: Issue 1: Valuation of Intermediate Product The appeal centered around the valuation of an intermediate product, Proteolysed Liver Extract and Pharma Reptone, used in the manufacture of a final product subject to duty under the Medicinal & Toilet Preparations Act. The Appellant paid duty on the intermediate product based on prices from other manufacturers due to insufficient in-house production. The dispute arose when demands were raised against the Appellant, challenging the acceptability of the prices of comparable goods used for valuation. After a series of litigations, the matter was remanded to the adjudicating authority, who eventually dropped the demands based on the prices of comparable goods. However, the revenue appealed, arguing that the comparable goods should be from companies of similar reputation, production capacity, and turnover. The Tribunal, after reviewing the case, remanded the matter back to the adjudicating authority for a comprehensive valuation based on Rule 6 (b) (i) of Valuation Rules, allowing the Appellant an opportunity to present supporting records. Issue 2: Dispute Over Comparability of Goods The crux of the dispute revolved around the comparability of the goods purchased by the Appellant from different manufacturers for valuation purposes. The Appellant argued that the prices of goods from other manufacturers should be considered comparable for valuation, as these goods were used in the production process. The Tribunal agreed with the Appellant, noting that the Appellant had invoices from various manufacturers as a basis for valuation. The Tribunal directed the adjudicating authority to reexamine the facts and make a reasoned decision on the comparability of goods, emphasizing the need to follow Rule 6 (b) (i) of Valuation Rules and make reasonable adjustments. Issue 3: Application of Rule 6 (b) (i) and Rule 6(b) (ii) The parties also debated the application of Rule 6 (b) (i) and Rule 6 (b) (ii) for determining the cost of production. The Appellant argued that Rule 6 (b) (i) allowed adjustments in prices of comparable goods, while the revenue contended that Rule 6 (b) (ii) should apply for determining costs based on production or manufacture. The Tribunal, in its decision, emphasized the need for the adjudicating authority to follow Rule 6 (b) (i) for valuation, indicating that adjustments in prices of comparable goods should be reasonable and based on a thorough examination of the facts presented. In conclusion, the Tribunal allowed the appeal by way of remand, directing the adjudicating authority to reevaluate the valuation of the intermediate product in accordance with Rule 6 (b) (i) of Valuation Rules, ensuring a fair and reasoned decision based on the comparability of goods and reasonable adjustments.
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