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of <h1>Assessable value for excise is manufacturer's selling price including grey cloth, job-work, manufacturing profit; excludes post-manufacturing trader margins - Rule 174</h1> SC held that the assessable value of processed fabric for excise purposes is the price at which the manufacturer sells the goods, comprising the value of ... Assessable value of the processed fabric - Profits - 'Factory gate' - value of the grey-cloth plus the value of the job work done plus manufacturing profit and expenses - HELD THAT:- Rule 174 of the Central Excise Rules, 1944 enjoins that when goods owned by one person are manufactured by another the information is required relating to the price at which the said manufacturer is selling the said goods and the person so authorised agrees to discharge all the liabilities under the said Act and the rules made thereunder. The price at which he is selling the goods must be the value of the grey-cloth or fabric plus the value of the job work done plus the manufacturing profit and the manufacturing expenses but not any other subsequent profit or expenses. It is necessary to include the processor's expenses, costs and charges plus profit, but it is not necessary to include the trader's profits who gets the fabrics processed, because those would be post-manufacturing profits. Issues involved: 1. Clarification of assessable value of processed fabric for excise duty calculation.2. Declaration by trader to processor for determining assessable value.Issue 1 - Clarification of assessable value:The Supreme Court clarified that the assessable value of processed fabric for excise duty calculation would include the value of grey-cloth in the hands of the processor, value of job work done, manufacturing profit, and manufacturing expenses. This value would be considered at the factory gate, which is deemed to be the point of sale by the processor. An illustration was provided to explain this concept, where the total value was calculated by adding the value of grey-cloth, job work done, and manufacturing profit and expenses.Issue 2 - Declaration by trader to processor:If a trader provides a declaration to the processor regarding the price at which the processed goods will be sold in the market, the Excise authorities will consider this declared price as the assessable value of the processed fabric for excise duty calculation. However, this declared price should only include the price at which the processed fabric leaves the processor's factory along with the processor's profit. Rule 174 of the Central Excise Rules, 1944 mandates that the price at which the goods are sold must include the value of grey-cloth, job work done, manufacturing profit, and manufacturing expenses, excluding any subsequent profit or expenses. The trader's post-manufacturing profits are not required to be included in the assessable value calculation.
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