9911796707
TMI Blog1999 (7) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... Diesel Electric Locomotives mainly for use of Indian Railways. A few locomotives are sold to Public Sector Undertakings. The locomotives which are cleared for Indian Railways are exempt from payment of Excise Duty under Notification No. 197/87-C.E., dated 28-7-1987. The IC Engine is essential for a Diesel Electric Locomotive. The IC Engines are manufactured by the appellant which are captively consumed by the appellant in manufacture of Diesel Electric Locomotives. On the IC Engines, the appellant paid Central Excise Duty. For assessment of Excise Duty of IC Engines, the appellant filed price lists. The assessable value of IC Engines for captive consumption was worked out by the appellant adding Labour Charges, Material Charges and Over He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submitted that at the most 15% of profit earned can be added on 2% of the total sales to Public Sector Undertakings and duty could be collected only on these 2% sales and not on the remaining 98% transfers to Indian Railways. He submitted that Indian Railways is a Department of the Govt. of India and therefore, transfers of Diesel Electric Locomotives manufactured by the appellant cannot be termed as sales made at profit for purpose of Rule 6(b)(ii). He, therefore, prayed that the appeals may be allowed by setting aside the impugned order. 4. Shri P.K. Jain, ld. DR reiterated the findings of the authorities below stating that there were certain sales admittedly to Public Sector Undertaking at a profit. The appellant has earned the profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. We note that for determining value under Rule 6(b)(ii) of the Valuation Rules an element of profit which the assessee would have normally earned on the sale of such goods is to be added to other elements comprising the cost. In the instant case Diesel Electric Locomotive which was the final product was sold to Public Sector Undertaking though the sale was only 2% of the total production of Diesel Electric Locomotives yet the percentage is not material in-as-much as this was the profit which the appellant made in sale transactions at arms length. In the instant case we find that percentage is not material. What is material is whether on the product in which IC Engine was captively used, there was any profit normally earned the answer t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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