TMI Blog1997 (11) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... e list under Rule 6(b)(ii) of the Central Excise Valuation Rules, 1975, furnishing the cost of raw materials, the cost of production and indicating notional margin of profit as 10%. The price list was approved provisionally and paid duty on that basis. It was found that the gross profit of the final product in the year in question was 21.51%. On this basis, show cause notice was issued proposing quantification of the notional profit as 21.51% instead of 10% and proposing demand of differential duty. The notice was opposed by the respondent on several grounds. Respondent contended, inter alia, that there was actually no profit in the manufacture of Fireless Locomotive as only one unit was manufactured and there was no justification to adopt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent, contended that since only one unit of Fireless Locomotive was manufactured, there was no profit at all, but to buy peace price list was filed suggesting addition of 10% margin of profit, that the actual profit on the final product in this case can never be adopted as the notional margin of profit of the Fireless Locomotive in view of the difference in nature, quality and quantity of the products manufactured. According to him, the Collector (Appeals) committed a fundamental error in merely adopting the net profit of the final product as the notional profit of the intermediate product without considering the dis-similarities between the two products and without making any adjustment on account of such dissimilarities. Learned Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adurai, 1997 (91) E.L.T. 140, while the profit margin on the final product was 30.89%, the Tribunal reduced it to 20% for the intermediate product. 4. We find little similarity between the intermediate product and the final product in this case. The intermediate product is Fireless Locomotive and only one unit was manufactured. The final product was Soda Ash and evidently substantial quantity of the product was manufactured and cleared. The two products cannot be regarded as having any similarity. In these circumstances, there would be no justification in merely adopting the profit margin on the final product as the profit margin on the intermediate product. Necessarily some adjustment would be required. The gross profit and the net profi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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