Valuation of excisable goods cannot borrow profit from another product when assessing paper core under the valuation rules.

For valuation of paper core under Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975, profit earned on newsprint could not be imported into the assessable value of a different product. The rule requires valuation with reference to the goods under assessment, so profit attributable to newsprint was not a permissible basis for enhancing the value of paper core. The addition of the newsprint profit was therefore legally unsustainable and was set aside in favour of the assessee.

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Issues: Whether, for valuation of paper core, profit earned on newsprint could be added to the value of paper core under Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975.

Analysis: The authorities below enhanced the assessable value by adding 31.42% profit earned on newsprint in the previous year, while the goods under valuation were paper core. Rule 6(b)(ii) permits valuation with reference to the goods under assessment, and the profit relatable to one product cannot be imported into the valuation of another product. The addition of profit earned on newsprint was therefore not legally sustainable for determining the value of paper core.

Conclusion: The addition of 31.42% profit was impermissible and was rightly set aside, in favour of the assessee.

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