Pro rata deduction of common expenses in multi-product valuation may be examined when exact product-wise figures are unavailable.

Where a multi-product assessee cannot precisely identify product-wise octroi, turnover tax and secondary freight, pro rata apportionment based on turnover may be considered for deduction on merits, rather than rejected solely for lack of exact individual figures. The article also notes that the applicable tariff rate for sun glasses under Chapter 9004.10 required verification, with the competing rates of 18% and 16% ad valorem to be reconsidered in the assessment dispute. The matter was remitted for fresh adjudication on both the deduction claim and the correct duty rate.

---

---

Issues: (i) Whether abatement towards octroi, turnover tax and secondary freight in respect of sun glasses could be allowed on a pro rata basis by apportioning the common expenses according to turnover where exact product-wise figures were not available; (ii) Whether the rate of duty of 18% had been correctly applied, or whether the goods were assessable at 16% ad valorem under Chapter 9004.10.

Issue (i): Whether abatement towards octroi, turnover tax and secondary freight in respect of sun glasses could be allowed on a pro rata basis by apportioning the common expenses according to turnover where exact product-wise figures were not available.

Analysis: The deduction claim was based on the practical inability to identify exact expenditure attributable to sun glasses when the assessee cleared several products through depots. Support was drawn from precedent permitting deductions on an average basis where product-wise segregation of expenditure was not feasible. The cited circular also recognised equalised rates or average freight in multi-product and multi-location situations.

Conclusion: The claim for pro rata deduction was required to be examined on merits and could not be rejected merely because exact individual figures were not produced.

Issue (ii): Whether the rate of duty of 18% had been correctly applied, or whether the goods were assessable at 16% ad valorem under Chapter 9004.10.

Analysis: The assessee's contention that the applicable tariff rate was 16% under Chapter 9004.10 required verification by the appellate authority, as it formed part of the consequential valuation and duty determination arising from the same assessment dispute.

Conclusion: The question of the correct duty rate was also left for reconsideration by the Commissioner (Appeals).

Final Conclusion: The impugned order was set aside and the matter was remitted for fresh adjudication on the deduction claim and the applicable duty rate.

Ratio Decidendi: Where product-wise expenditure cannot be precisely allocated in a multi-product business, average or pro rata deduction may be examined as a permissible basis for valuation, and the revenue authority must consider such claim on the evidence and applicable tariff position.

---