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TMI Blog2003 (9) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... ut is arbitrary, unreasonable and contrary to law has to be accepted. Adopting 115% of cost of production may be a reliable method where the manufacturer in question is operating at a profit. The same norm would be wholly unreliable where manufacturer is incurring huge losses. Rules lay down reasonable means consistent with principles and general provisions of the Rules and sub-section (1) of Section 4 of the Central Excise Act for ascertaining the value of the goods. In the present case, the determining the assessable value at 115% of the cost of production was clearly unreasonable and inconsistent with the principles and general provisions of the Rules and sub-section (1) of Section 4 of the Central Excise Act. The principle laid down in the Section 4(1) of the Act is to adopt the sale price, where price is the sole consideration as the assessable value of the goods. The original valuation of the goods in question was according to this principle. The sale price to other buyers was adopted as the value for goods transferred to job worker also. Duty was also paid on that basis. There was no requirement to alter that basis for valuation and to make the demand for additional payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the value has to be determined in respect of each removal of goods. In other words, there can be as many transaction values as the removal of goods and each has to be determined individually. Thus, the assessable value in respect of billets sold by the appellants at the factory gate will not, by itself be applicable to the removals of billets to job workers. This was so the position prior to 1-7-2000, under old Section 4, when the assessable value was arrived at by determining the normal price. Since, the normal price concept has been done away with and the assessable value has now to be determined for each removal, reliance by the appellant on various case laws is inappropriate to the changed law. 7. In respect of removals of steel billets to job worker, the assessable value is, therefore, to be determined independent of the sales of such billets to other persons. Since the removals to job worker are not by sale, therefore, the provisions of Clause (a) to sub-section (1) of Section 4 would not have any application and one has to take resort to the provisions of clause (b). In other words, valuation of steel billets has to be determined under the provisions of the Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has consumed the goods in the production of other goods but has transferred the goods for job work. It is the appellant's contention that valuation principle applicable to goods produced on job work basis should apply to the appellant's case also. In this context, the appellant has referred to CBEC Circular No. 619/10/2002-CX, dated 19-2-2002 wherein it has been clarified that, after 1-7-2000 the valuation of the goods manufactured on job work basis would be governed by Rule 11 of the new Valuation Rules, 2000 read with Rule 6 and decisions of the Apex Court in the case of Ujagar Prints Ltd. - 1989 (39) E.L.T. 493 (S.C.) and Pawan Biscuits Ltd. - 2000 (120) E.L.T. 24 (S.C.). Appellant has pointed out that the valuation principle approved by the Hon'ble Supreme Court is that the assessable value in such cases would be the price of the raw materials supplied to the job worker plus job charges (including profit) of the job worker. Based on this legal position, it is being submitted that price of the steel billets in the present case should be the price at which the steel billets in question are bought and sold in independent commercial transactions. 5. With particular referen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contention that Rule 8 being specific to the facts of the case, the lower authorities could not be faulted for taking the value at the measure 115% of the cost of production provided in that Rule as the assessable value. He has also submitted that specific provision in law has to be followed irrespective of the hardship caused to an individual assessee. Learned SDR has also pointed out that Circular dated 19-2-2002 of the Board had no application to the present case inasmuch as this is not a case involving the valuation of goods produced on job work basis. He has also submitted that Rule 11 has no application as that is a residuary provision invocable only when other Rules are not applicable. 8. Section 4(1) lays down the principle of Central Excise Valuation. The core of it is that value shall be the price at which the transaction is carried out. Sub-section (b) of Section 4 relates to valuation of goods which are not transacted through sale. Valuation Rules have been formulated as a guide for the determination of value of goods which are disposed of except through sale. The direction cumulatively conveyed by these rules is to determine the value of those goods as their would ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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