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TMI Blog2016 (6) TMI 1018X X X X Extracts X X X X X X X X Extracts X X X X ..... t since the application of paint contains labour costs, the assessable value is to be determined under Rule 11 only after deduction of the value of labour component from the total value for supply and apply. With regard to the appellant’s other contention that there is a profit component for the apply portion, for reasons discussed supra, we uphold the lower authority s conclusion that since the sale of product viz- paint is linked to the application part of the paint at the customer's site, the application is in relation to the goods and therefore, except the value of the labour component for application no other component can be deductible from the sale value for arriving at assessable value. Demand alongwith interest confirmed - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriods from 4/2003 to 3/2004, amount is ₹ 2,08,176/- (relating to Appeal E/788/2007) and from 4/2004 to 3/2005, amounting to ₹ 4,53,231/- (relating to Appeal No. E/789/2007). On adjudication, the demands were confirmed along with imposition of interest and penalty. On first appeal, the lower appellate authority/Commissioner (Appeals) upheld the adjudication orders. Aggrieved by the impugned orders, the appellant herein has filed these appeals. 3. It is the contention of the appellant that the goods are not offered for sale but are consumed by them for execution of supply and apply contract. Since all other rules in Valuation Rules deal with sale, the proper method of valuation would be by cost analysis method as prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcisable goods sought to be cleared out of the factory by the appellant are paints only and not any other article produced or manufactured thereof. In our view, from the facts on record, the Supply part of the Supply and Apply contract would involve clearance only of paints outside the factory and they have to be necessarily considered sale of the goods at the appropriate assessable value. On the other hand, the Apply part of the contract would involve only labour charges. The reliance placed by the appellant on Clarification 13 of Board s Circular dated 01.07.2002 will not help them, since the situation covered therein is that of samples (of excisable goods) distributed free and there is no sale involved. The case laws relied upon by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a profit component for the apply portion, for reasons discussed supra, we uphold the lower authority s conclusion that since the sale of product viz- paint is linked to the application part of the paint at the customer s site, the application is in relation to the goods and therefore, except the value of the labour component for application no other component can be deductible from the sale value for arriving at assessable value. 9. We therefore do not interfere with the demands of duty and interest liability thereof confirmed by the lower authorities, in both the appeals before us. 10. However, on the issue of penalties imposed under section 11 AC of the Central Excise Act, 1944 we find that the matter involves an interpretational d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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