Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2018 (3) TMI AT This

  • Login
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

2018 (3) TMI 395 - AT - Central Excise


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.

 

 

 

 

Quick Updates:Latest Updates