2004 (10) TMI 91 - SC - Central Excise

Supreme Court remands duty valuation case to CEGAT for proper application of Ashok Leyland precedent under Section 4(1)(b)

SC allowed appeals in duty valuation dispute, remitting matter to CEGAT for reconsideration. Department's case relied on Rule 6 of Valuation Rules, but ... Short levy of duty - Held that:- It is correct as contended by learned counsel for the assessee-appellant that the department's case rested on Rule 6 of the Valuation Rule. CEGAT did not consider the applicability of Ashok Leyland's case (2002 (11) TMI 98 - SUPREME COURT OF INDIA) in the background of Rule 6 of the Valuation Rules though it has substantial bearing on the dispute wherein held that since price is ascertainable by way of direct sale, the question of applying Section 4(1)(b) of the Act would not arise.. In the aforesaid circumstances without expressing any view on the merits we remit the matter to the CEGAT for considering the factual aspect and the applicability of Ashok Leyland's case (supra) to the facts of the present case. The appeals are allowed Issues: Whether the principles in Ashok Leyland regarding valuation by market price (thereby excluding application of Section 4(1)(b) and Rule 6) apply to valuation of goods captively consumed by the assessee where a small proportion is sold in the spare parts market but the captively consumed goods are not identical to those sold.Analysis: The statutory valuation framework provides that where a normal/market price is ascertainable, Section 4(1)(b) and Rule 6 (which apply when price is unascertainable) do not apply; valuation is to be based on the market/normal price of goods directly sold. Precedential statements must be applied only after examining whether the factual matrix of the precedent matches the facts at hand; even small factual differences may alter applicability. The tribunal's decision applied the precedent without addressing whether the factual differencesspecifically, whether the goods captively consumed are identical to those sold in the spare market and whether Rule 6(b) therefore applieswere material to its conclusion. Given the significance of those factual issues to the choice between market-price valuation and Rule 6 valuation, factual determination by the tribunal is necessary before final application of the precedent.Conclusion: The matter is remitted to the Tribunal for fresh factual consideration of whether market-price valuation (and accordingly non-applicability of Section 4(1)(b) and Rule 6) applies; appeals are allowed to the extent of this remand in favour of the assessee for reconsideration.