Value of Excisable Goods sold at Depot will be Determined on Basis of Sale Price from Depot including Goods Manufactured and Bought Out: CESTAT [Read Order]

The Mumbai bench of Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), in the issue of value of excisable goods sold at depot has held that value will be determined on basis of sale price from depot including goods manufactured and bought out.

The appellant, M/s. Raychem RPG Ltd. is engaged in the manufacture of excisable goods such as Electrical Insulating Material, Heat Shrinkable Sleeves/Tubes, Power Cable Accessories, Surge Arrestors, Bus Bars, Branch Off Clips etc. The appellant were clearing these excisable goods on stock transfer basis, to their Customer Care Centre (depot). At their depot, they also procure some bought out items directly from the market. These bought out items are put together in cartons along with the excisable goods cleared by them from their factory. These goods packed in the cartons are sold from their depot in the name of “Cable Jointing Kits”.

The appellant have failed to give the selling price of the components manufactured in their factory which are put up along with other bought out items constituting various cable jointing kits. The Commissioner of Central Excise holds that the value determined by the Appellant under Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, is improper. Aggrieved by the order, appeal filed by the appellant before the CESTAT.

The appellant submitted that, only some bought out items are placed together with the manufactured items in a combo pack just for the purpose of convenience so that both types of goods manufactured and bought out are conveniently available readily at the site where the goods are put to use first time after their clearance from the factory.

Mr. S S Gupta, Chartered Accountant for the appellant submitted that, it cannot be said that the ‘Cable Jointing Kit’ is produced or manufactured by using or consuming the excisable goods cleared from the factory of the assessee. It is only a new name given to a combo pack -Cable Jointing Kit – different than the goods contained in the combo pack. The excisable goods do not lose their identity in the combo pack. The goods are in their original form and packed in the combo pack.

The Tribunal bench presided by Mr. Sanjiv Srivastava, Member (Technical) and Mr. P. Dinesha, Member (Judicial) by relying the decision of Apex Court in case of Sidharta Tube, held that “the value will be determined only on the basis of sale price from depot”. The Tribunal further observed that “the form in which the goods have been sold at depot are in package comprising of the goods cleared from the factory of appellant and other bought items packed together in a carton. Hence the sale price of the goods comprise of the sale price of the goods manufactured by the appellant and the sale price of the goods trade by the appellant”.

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