Market-based excise valuation cannot be enhanced by balance-sheet additions, and final findings cannot be reopened in remand proceedings.

Processed grey fabrics were valued on a market-based cost approach under Rule 6(b)(i), with the assessee including yarn cost, conversion charges, wastage, process loss, and processing and packing charges. The commentary notes that the Revenue proposed to add balance-sheet items such as interest, administrative expenses, employee payments, and depreciation, but that approach lacked legal basis where market-based costing had already been accepted. It also states that a 10% notional profit margin demand and a penalty issue could not be reopened in de novo proceedings after earlier unchallenged orders had attained finality, so final findings on those points remained binding.

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Issues: (i) Whether the valuation of processed grey fabrics could be enhanced by adding balance-sheet expenses and other amounts over and above the prevailing market-based cost adopted by the assessee under Rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975. (ii) Whether the demand relating to 10% notional profit margin and the penalty on the second assessee could be reopened in de novo proceedings despite the earlier unchallenged orders.

Issue (i): Whether the valuation of processed grey fabrics could be enhanced by adding balance-sheet expenses and other amounts over and above the prevailing market-based cost adopted by the assessee under Rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975.

Analysis: The assessee had adopted cost components based on prevailing market rates, including yarn cost, conversion charges, wastage, process loss, and processing and packing charges. The Revenue sought to add further expenses such as interest, administrative expenses, employee payments, and depreciation from the balance sheet to arrive at the assessable value. The valuation method had already been rejected in the assessee's own case for a subsequent period, where it was held that reliance on balance-sheet figures and arbitrary additions had no legal basis. The Tribunal applied the same reasoning and found no warrant to discard the market-based valuation adopted by the assessee.

Conclusion: The valuation adopted by the assessee was held to be correct, and the Revenue's enhancement was rejected.

Issue (ii): Whether the demand relating to 10% notional profit margin and the penalty on the second assessee could be reopened in de novo proceedings despite the earlier unchallenged orders.

Analysis: The demand on account of notional profit margin had already been dropped in the earlier round, and that finding was not challenged by the Revenue. Likewise, the earlier order setting aside penalty on the second assessee had attained finality as it was not carried further. In these circumstances, the Tribunal held that the matters could not be reopened in remand proceedings and that the earlier conclusions bound the parties.

Conclusion: The Revenue's challenge on both counts was rejected, and the demand on notional profit margin as well as the penalty on the second assessee remained dropped.

Final Conclusion: The assessee succeeded on the valuation dispute, while the Revenue failed to disturb the earlier final findings on notional profit margin and penalty, resulting in a mixed outcome with overall relief to the assessee.

Ratio Decidendi: Where valuation is already supported by market-based costing and the Revenue's additions rest only on balance-sheet figures without legal foundation, the assessable value cannot be arbitrarily enhanced; further, issues that have attained finality and were not challenged cannot be reopened in de novo proceedings.

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