Excise valuation of PTFE must follow sale price basis; exemption limit kept the duty demand unsustainable.

PTFE valuation for excise duty had to be based on the unit sale price of the goods sold, not on balance-sheet figures that included unrelated trading items. Because part of the production was sold to independent buyers and those prices reflected the normal price, the annual production value, including captively consumed quantities, was required to be computed under the Central Excise valuation scheme on that basis. On the correct computation, the production remained within the exemption limit, so the duty demand, penalty, and consequential liability could not be sustained.

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Issues: Whether the value of PTFE manufactured by the assessee had been correctly computed for excise duty purposes, and whether the resulting production fell within the exemption limit so as to negate duty, penalty, and consequential liability.

Analysis: The computation adopted in the impugned order was found to be erroneous because the balance sheet relied upon by the Revenue included trading figures of other goods which had no bearing on the valuation of the excisable product. The relevant production of PTFE was shown to have been sold partly to independent buyers, and those sale prices represented the normal price of the goods. The valuation of the annual production, including the quantity captively consumed, was required to be based on the unit sale price of the goods sold. Such valuation was consistent with the scheme of Section 4 of the Central Excise Act and Rule 6 of the Valuation Rules. On that proper basis, the production remained within the exempted value limit.

Conclusion: The duty demand, penalty, and related consequences could not be sustained.

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