Valuation Disputes Lie within Supreme Court Jurisdiction: Gauhati HC Dismisses Excise Appeals [Read Order]

The Gauhati High Court has dismissed two excise appeals filed by the Commissioner of Central Excise and Service Tax against S.C. Johnson Products Pvt. Ltd, holding them not maintainable. The Court reasoned that disputes concerning special value addition under exemption notifications directly relate to the valuation of goods for duty assessment, which falls within the exclusive jurisdiction of the Supreme Court under Sections 35G and 35L of the Central Excise Act, 1944.

The respondent company, S.C. Johnson Products Pvt. Ltd, a manufacturer of mosquito repellents and cleaning preparations with units in Guwahati, was entitled to a special rate of value addition for the financial year 2010-11 under Notification No. 32/99‑CE and its subsequent amendments.

The Commissioner had rejected the company’s application, arguing that the sale values used to calculate value addition were not actual unitwise sales but estimates derived from consolidated audited financial statements apportioned between units using stock‑transfer ratios.

According to the Commissioner, this methodology did not accurately reflect the true extent of value addition, thereby disqualifying the company from claiming the exemption.

On appeal, however, the CESTAT set aside the Commissioner’s orders, holding that the methodology adopted by the company was valid and consistent with judicial precedent. The Tribunal relied on its earlier decision in Hindustan Unilever Ltd. v. Commissioner of Central Excise & Service Tax, Dibrugarh, and concluded that apportioning consolidated financial data was an acceptable method for determining unit‑wise sale values. Accordingly, the Tribunal directed that the special rate of value addition be fixed in favor of the company.

Challenging this decision, the Revenue approached the Gauhati High Court, raising three substantial questions of law. These included whether fixation of special value addition could be rejected merely because sale values were derived from consolidated accounts, whether the Tribunal was correct in treating the issue as settled by precedent, and whether the methodology of apportionment was legally sustainable.

The respondent company countered that separate applications had indeed been filed for each unit and argued that the appeals were not maintainable under Section 35G, since the dispute related to the valuation of goods for assessment, which lies exclusively with the Supreme Court under Section 35L.

The High Court agreed with the respondent’s position. Referring to Sections 35G and 35L of the Central Excise Act, the bench of Justice Michael Zothankhuma and Justice Mitali Thakuria observed that appeals involving the determination of questions relating to the rate of duty or valuation of goods for assessment cannot be entertained by High Courts.

The Court cited the Supreme Court’s ruling in Commissioner of Customs v. Motorola India Ltd. (2019) and High Court decisions in Zydus Healthcare (Sikkim HC, 2025) and Sun Pharma Laboratories (J&K HC, 2019), all of which consistently held that valuation disputes fall within the apex court’s jurisdiction.

The Gauhati High Court noted that the Commissioner had himself granted exemptions using the same methodology for the previous year (2009-10), but denied them for 2010-11, underscoring the valuation‑linked nature of the dispute.

Concluding that the substantial questions of law raised were directly and related to the valuation of goods for duty assessment, the Court dismissed the appeals as not maintainable.Case No. : C.Ex.App./1/2025

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