Ministry of Finance Clarifies "Manufacturing Profit" u/r 6(b) for Internal Consumption; Past Year Profits Valid.

The circular from the Ministry of Finance addresses concerns regarding the interpretation of "manufacturing profit" under Rule 6(b) of the Central Excise Valuation Rules, 1975, specifically for goods consumed internally. It clarifies that the profit margin from the previous year can be used to determine assessable value when comparable goods' value is unavailable. Despite doubts about the legality of using past profits, the Ministry, after consulting with the Ministry of Law, concludes that the current instructions do not require revision or rule amendments. The previous year's profit is deemed a reasonable estimate of the profit the manufacturer would have normally earned.

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