Excise valuation of aluminium products: actual raw-material price applies, while duty-paid input credit must be excluded.

Excise valuation of aluminium extruded shapes and sections had to be based on the actual invoice price of the aluminium slugs actually consumed, not a notional control-period price, because assessable value is determined by actual raw-material cost and manufacturing profit. The adoption of the actual invoice price was therefore sustained. Where duty-paid slugs were used and proforma credit was available, however, the duty element could not form part of the assessable cost of the finished goods, so that amount had to be excluded. The valuation succeeded only to that limited extent, with the raw-material pricing basis otherwise upheld.

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Issues: (i) Whether the base price of aluminium slugs adopted for computing the cost of the extruded shapes and sections was correct; (ii) Whether the price of the slugs should be reduced by the amount of duty paid on them in respect of which proforma credit had been taken while computing the cost of the finished goods.

Issue (i): Whether the base price of aluminium slugs adopted for computing the cost of the extruded shapes and sections was correct.

Analysis: The price list had to be worked out on the basis of the actual value of the raw materials used in manufacture. Since the invoice price of the slugs actually consumed was available, there was no basis for substituting the notional control-period price. The assessable value under the excise scheme is to be determined with reference to actual cost and manufacturing profit, not on a hypothetical or expected price basis.

Conclusion: The adoption of the actual invoice price of aluminium slugs was upheld, and this issue was decided against the assessee.

Issue (ii): Whether the price of the slugs should be reduced by the amount of duty paid on them in respect of which proforma credit had been taken while computing the cost of the finished goods.

Analysis: Where duty-paid material or components are used and credit is available under the proforma credit scheme, the duty element cannot form part of the assessable cost of the finished product to that extent. The duty paid on the slugs had to be excluded while arriving at the assessable value of the extruded shapes and sections.

Conclusion: The duty element was directed to be deducted, and this issue was decided in favour of the assessee.

Final Conclusion: The revision succeeded only on the question of exclusion of duty-paid component credit, while the valuation based on the actual price of the raw material was sustained.

Ratio Decidendi: For excise valuation, the assessable value must be based on the actual price of raw materials used, and any duty element in respect of inputs eligible for proforma credit must be excluded from the assessable cost of the finished product.

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