Transfer to sister concern: valuation follows supplier invoice value, and debit-note recoveries are excluded from excise assessable value.

Where inputs taken on credit are transferred, rather than sold, from one sister concern to another, valuation follows the supplier's invoice value under the governing credit-reversal and valuation framework, as the Tribunal's finding of transfer under a joint procurement arrangement was one of fact. The Court also accepted that post-manufacturing expenses, including bank charges, interest and similar amounts recovered through debit notes, cannot be loaded into the duty-equivalent or assessable value because they fall outside the statutory measure. The transfer was therefore valued on the supplier's invoice, and the debit-note recoveries were excluded from excise valuation.

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Issues: Whether the removal of inputs from one sister concern to another was a sale or a transfer, and whether the amounts recovered through debit notes towards bank charges, interest and similar expenses were includible in the assessable value for excise purposes.

Analysis: The relevant rules required payment of an amount equal to the duty leviable on the goods at the rate applicable on the date of removal and on the value determined under Section 4 or Section 4A of the Central Excise Act, or under Section 4 of the Central Excise Act in the earlier rule. The finding recorded by the Tribunal that the pellets were transferred under a joint procurement arrangement and not sold was a finding of fact. In a case of transfer to a sister unit where no sale is involved, the circular governing valuation permitted adoption of the value shown in the supplier's invoice on which credit had originally been taken. The Court also accepted that post-manufacturing expenses could not be loaded into the amount payable as duty-equivalent, because that would exceed the statutory measure.

Conclusion: The transfer was rightly valued on the basis of the supplier's invoice, and the debit-note amounts were not includible in the assessable value. The appeals therefore failed.

Ratio Decidendi: Where inputs taken on credit are transferred, and not sold, to a sister unit, valuation is to be based on the supplier's invoice value in accordance with the governing circular and the relevant credit-reversal rule, and post-manufacturing expenses cannot be added to the duty-equivalent amount.

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