Valuation of free-supplied inputs supported waiver of pre-deposit and stay where declared transaction value appeared prima facie correct.

Valuation of free-supplied inputs used in manufacture of excisable goods was examined in relation to waiver of pre-deposit and stay of recovery. The order noted that the applicants, as users of coupling plates supplied by another manufacturer, could not themselves fix the value of those inputs, and that input valuation was for the supplying manufacturer to determine. It further recorded no allegation of flow-back from buyers and found the declared transaction value prima facie correct. The valuation objection was therefore treated as requiring fuller examination at the appeal stage, and waiver of pre-deposit with stay of recovery was granted pending disposal of the appeal.

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Issues: Whether the applicants had made out a prima facie case for waiver of pre-deposit and stay of recovery in a dispute concerning valuation of free-supplied inputs used in manufacture of excisable goods.

Analysis: The applicants used coupling plates supplied free of cost as input in the manufacture of their final products. The dispute centred on whether the value declared for those inputs was understated and whether the resulting assessable value of the final products was therefore incorrect. The order noted that, as users of inputs supplied by another manufacturer, the applicants could not themselves fix the value of those inputs, and that valuation of the inputs was a matter for the manufacturer of the inputs. The order also recorded that there was no allegation of any flow-back from buyers, and that the declared transaction value appeared prima facie correct. On that basis, the valuation objection was held to require fuller examination at the appeal stage.

Conclusion: The applicants were held entitled to waiver of pre-deposit and stay of recovery pending disposal of the appeal.

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