Assessable value for non-market excisable goods includes manufacturing profit and may be estimated reasonably on objective material.

For excisable component parts not sold in the market, assessable value under Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975 includes cost of manufacture plus a reasonable margin of manufacturing profit. Where actual profit cannot be determined exactly, a reasonable estimate may be made on objective material, and the manufacturer's profit and loss account can provide a logical basis for that estimate. The Government accepted that assessable value is not confined to manufacturing cost alone and upheld the valuation adopted by the lower authorities, finding the suggested alternative methods less appropriate on the facts.

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Issues: Whether the assessable value of component parts not sold in the market was to be determined under Rule 6(b)(ii) of the Central Excise (Valuation) Rules, 1975 by taking the cost of manufacture together with a reasonable margin of profit.

Analysis: The Government held that assessable value is not confined to manufacturing cost alone. It applied the principle that valuation must include manufacturing profit as part of the assessable value. It further accepted that where exact determination of profit is not possible, the margin of profit may be estimated on a reasonable basis, and the profit and loss account of the manufacturer provided a logical and reasonable basis for such determination. The suggested alternative methods were not found preferable or less arbitrary on the facts.

Conclusion: The assessable value was correctly computed by adding a reasonable margin of profit to the cost of manufacture, and the computation adopted by the lower authorities was upheld.

Final Conclusion: The revision failed, and the order-in-appeal confirming the valuation method was sustained.

Ratio Decidendi: In valuation of excisable goods not sold in the market, assessable value includes cost of manufacture plus manufacturing profit, and where exact profit cannot be determined, a reasonable estimate may be adopted on objective material.

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