9911796707
TMI Blog2004 (11) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... ir service centres. 3. The appellants who manufacture compressors have a parent company and also a Stator Rewinding Unit with separate central excise registration for the compressors. They manufacture Stator Wounds in the factory which are captively consumed. They also manufacture Stator Wounds in their Stator Rewinding Unit out of retrieved stator stacks as indicated above. The Stator Wounds are not sold. They are used in the manufacture of compressors or sent to their service centre. Since no sale is involved, the appellants resort to Rule 6b(i) of Central Excise Valuation Rules, 1975. Under this Rule value is based on value of comparable goods. While determining the value of the stator wounds manufactured out of retrieved stator stacks, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e urged that Rule 6(b) of the Central Excise Valuation Rules clearly provide for adjustments in the valuation of comparable goods. He said there is always difference between a new item and a used one. While costing the price, due allowance should be given for depreciation. The practice of adopting depreciation is not only recognized under the Income Tax Act but also in Customs and Central Excise Valuation. While clearing capital goods, on which Modvat credit is taken, due allowance is given for depreciation. This is provided in the rules. Similarly while clearing used machinery and motor machines in the Customs, depreciation is allowed in determining value for customs purposes. It is a settled law that while adopting values of comparable go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for adjustments which are reasonable. The question is whether allowing depreciation for a used item is reasonable or not. In our view the cost of new item cannot be the same as the cost of an item used say for three years. In commercial practice while costing a used item, due allowance is given for depreciation of its value. Moreover all the case laws cited by the appellant are in their favour. Under these circumstances, the demand of the differential duty equating stator wounds manufactured out of new stator stacks and the stator wounds manufactured out of retrieved and used stator stacks is repugnant to the settled legal position as well as normal commercial practice. In the circumstances of the case, the appellant succeeds. We allow the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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