Amortised cost governs valuation of buyer-owned cylinders in excise assessable value, not the entire cylinder value.

Where plastic pouches were manufactured using buyer-owned cylinders, only the amortised cost attributable to the quantity produced and cleared could be added to assessable value under Rule 6 of the Central Excise Valuation Rules. The valuation could not be based on the entire value of the cylinders because ownership remained with the buyer. A cost accountant's certificate was found inadequate for lack of evidence on cylinder life, capacity, and per-piece amortisation. The Revenue's valuation approach was therefore unsustainable, and the matter was remanded for fresh determination of the correct amortised cost.

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Issues: Whether, for valuation of plastic pouches manufactured using buyer-owned cylinders, the entire value of the cylinders could be added to the assessable value or only the amortised cost attributable to the quantity produced.

Analysis: Under Rule 6 of the Central Excise Valuation Rules, where the cylinders remained owned by the buyer of the finished goods, only the amortised cost relatable to the goods manufactured and cleared could be added to the value of the plastic pouches. A demand raised on the entire value of the cylinders was held to be incorrect. The cost accountant's certificate was found insufficient because it did not establish the life or capacity of the cylinders for the purpose of computing amortisation; that exercise required proper ascertainment of capacity and corresponding per-piece amortised cost.

Conclusion: The valuation adopted by the Revenue was unsustainable, and the matter was remanded to the Adjudicating Authority for fresh determination of the correct amortised cost.

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