2006 (8) TMI 56 - AT - Central Excise

Valuation(Central Excise) - Alleged that appellant manufacture of toothpaste not display the MRP,as per Standards of Weights and Measures Rules, 1977- For determining the value no fixed method is prescribed

Summary

Issues: Valuation of Toothpaste for duty determination under section 4A of the Central Excise Act; Assessment of Toothpaste not required to display MRP; Application of valuation rules for goods manufactured on job-work basis.

In this judgment by the Appellate Tribunal CESTAT, Mumbai, the appellants, engaged in manufacturing Toothpaste, challenged the valuation of Toothpaste for duty determination under section 4A of the Central Excise Act. The issue revolved around the requirement of MRP declaration for Toothpaste, which the appellants produced and cleared without such requirement, as per the Standard of Weights and Measures Rules, 1977. The lower authority applied Rule 6(b)(i) or Rule 4 to determine the valuation of Toothpaste, similar to the valuation under section 4A. However, the Tribunal found that 'value' under the Central Excise (Valuation) Rules, 1975, is defined as valuation under section 4 of the Act, leading to the rejection of adopting values under section 4A under Rule 4 or Rule 6(b)(i). Consequently, the orders based on such valuation were set aside.

Furthermore, the Tribunal addressed the issue of assessing the value of goods manufactured on a job-work basis but not consumed and returned to suppliers. It was clarified that such goods should not be valued based on comparable goods under Rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975. Instead, they are required to be valued as per the Ujagar Prints formula, following the precedent set in the case of Kandivili Metals, [1997 (90) E.L.T. 187]. As a result, the appeal was allowed, and the case was remanded to determine the value as per the Ujagar Prints formula, with any duty demand to be calculated thereafter.

In conclusion, the appeals were allowed as remand, emphasizing the correct application of valuation rules for goods manufactured on a job-work basis and the necessity to follow the prescribed formulas for valuation as per legal precedents.