Transaction value governs excise valuation where separate supply prices exist, and reconstructed pricing needs evidence of suppression.

Assessable value under central excise is based on transaction value where the price for each clearance is ascertainable. Separate agreed prices for nitrogen supplied from air and nitrogen supplied from liquid nitrogen could not be displaced by a uniform reconstructed value under Rule 11 merely by reference to the purchase price of liquid nitrogen, absent evidence of extra consideration or suppression. The article also notes that where the assessee's valuation method under Rule 6, including free supplies such as electricity and water, was not properly examined, the valuation dispute should be reconsidered afresh through de novo adjudication.

---

---

Issues: (i) Whether the assessable value of nitrogen gas cleared to the buyer could be substituted by applying Rule 11 of the Central Excise Valuation Rules, 2000 on the basis of the purchase price of liquid nitrogen, despite different agreed prices for different streams of supply; (ii) Whether the matter required remand for fresh determination after considering the assessee's valuation under Rule 6 of the Central Excise Valuation Rules, 2000.

Issue (i): Whether the assessable value of nitrogen gas cleared to the buyer could be substituted by applying Rule 11 of the Central Excise Valuation Rules, 2000 on the basis of the purchase price of liquid nitrogen, despite different agreed prices for different streams of supply.

Analysis: The valuation regime under Section 4(1)(a) of the Central Excise Act, 1944 proceeds on transaction value where the price actually charged for each clearance is ascertainable. The supplies in question were made under an agreement that fixed different prices for nitrogen produced from air and nitrogen produced from liquid nitrogen during power failure. The Tribunal found that these were separately identifiable transactions and that the department had not produced evidence of any amount over and above the declared price or of suppression of the true transaction value. In the absence of such evidence, the entire clearance could not be valued on the basis of the liquid nitrogen purchase price or on a uniform reconstructed value under Rule 11.

Conclusion: The rejection of transaction value for the entire clearances was not sustainable.

Issue (ii): Whether the matter required remand for fresh determination after considering the assessee's valuation under Rule 6 of the Central Excise Valuation Rules, 2000.

Analysis: The record showed that the assessee had claimed valuation after accounting for free supplies such as electricity and water under Rule 6, but the show cause notice and adjudication order did not properly examine that computation. Since the valuation exercise had not considered the assessee's method in a reasoned manner, the proper course was to send the matter back for re-determination of the assessable value in light of the Tribunal's observations.

Conclusion: The matter was remanded for de novo adjudication.

Final Conclusion: The demand could not be sustained on the valuation adopted in the impugned order, and the valuation dispute was required to be reconsidered afresh by the adjudicating authority.

Ratio Decidendi: Where separate and identifiable transaction prices exist for different clearances, assessable value under excise law cannot be substituted by a reconstructed uniform value in the absence of evidence of additional consideration or suppression of the actual transaction value.

---