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2015 (8) TMI 586 - SC - Central ExciseValuation - best judgment assessment - Arm length sales is below the cost of production - related person - interconnected undertaking - Held that:- According to the Department, if the sale price contained in another chart is compared with the cost of production, it is clear that even the sales made to arm's length purchasers is at prices ranging between ₹ 69,000/- and ₹ 85,000/- which is way below cost at ₹ 1,57,548/-. While agreeing with the CESTAT that none of the Central Excise (Valuation) Rules would be directly applicable as a result of which Rule 11 would have to be relied upon - which gives the authority the power to make a best judgment assessment - we find that on facts in the present case, the cost of manufacture plus 15 per cent principle would not be attracted for the simple reason that it is found that in point of fact, sales made to arm's length purchasers were way below cost - To apply the cost plus principle on facts where arm's length sales are made at well below cost is to choose a principle that would work arbitrarily as the endeavour of the assessing authority is to arrive at an arm's length wholesale cash price to value the aforesaid manufactured articles for purposes of levy of excise duty. - Impugned order is partly set aside - Decided partly in favour of assessee.
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