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TMI Blog2007 (11) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... t judgment assessment in terms of Rule 7 of Central Excise (Valuation) Rules, 1975 (1975 Rules for short). 3. RSWML are the manufacturers of yarn and fabric. It had set up a process house at Mordi in 1994-95. The process house was set up for processing their fabric. The woven fabrics manufactured at their weaving unit was processed on job work basis by Mordi processing house. This was with effect from 29th March, 1995. On 16th June, 1995 the said process house was let out by RSWML to Bhilwara Spinners Limited (BSL). Later on the lease agreement between RSWML and BSL stood terminated and the process house was leased out to Purvi Fabrics & Textures (PFTL). 4. The above arrangement was doubted by the Department. Therefore, the Department iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplated by Rule 6(b)(ii). In this case even if we are to proceed under Rule 6(b)(i), as contended by the Department, we find from the facts that RSWML used to receive unsorted fabrics from its process house, RSWML thereafter used to carry out the work of sorting and thereafter the goods were cleared through their Depot. Under Section 4(1)(a) of the Central Excise Act as it stood at the relevant time, in case of valuation falling under Section 4(1), the normal price constituted the basis of assessable value. We quote hereinbelow Section 4(1)(a) : "4. Valuation of excisable goods for purposes of charging of duty of excise. — (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h reads as under : "Even if the value is determined on comparable goods basis, there would be no differential duty liability at all. This is evident from the following : Qty (mtrs) Value (Rs.) Assessable value as per 52A Invoices from process house for the period 16-6-95 to 20-2-98 17004521 105,53,29,128 Add : excise duty paid 16,20,17,071 Total cum duty value 17004521 121,73,46,199 Add : 40% towards value addition between lump and graded fabric 48,69,38,480 Expected sale price of processed fabrics - graded 17004521 170,42,84,679 Proportionate actual realization on sale of graded fabrics as per commercial invoices 17004521 167,35,65,236" 9. If one analysis the above table it is clear that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of assessable value. At the same time one must keep in mind that different methods prescribed have to converge to a common valuation. For example, as stated above, Rule 6(b)(i) prescribes "comparable goods method", Rule 6(b)(ii) prescribes "cost method" and Rule 7 which contemplates best judgment assessment states that the Assessing Officer is free to apply any of the methods prescribed by Rules 1 to 6 of 1975 Rules. We would like to, therefore, emphasize the aspect of convergence. It is not possible to accept wide variation in the result. The Department may apply different methods of valuation, but it has to ultimately ascertain by applying rule of convergence the estimated ad valorem value which would constitute the basis of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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