Excise valuation follows factory-clearance price; later depot repacking cannot replace the assessable value of bulk-cleared lubricating oil.

Excise valuation of lubricating oil had to be determined by the normal price at the time and place of removal from the factory, not by the later sale price of smaller retail packs created at depots. Repacking at a depot or packing station did not alter the assessable value when the goods were cleared from the factory in bulk or in 205 litre barrels. For oil sold in 205 litre barrels, valuation was to be based on that price less the cost of barrels; for grades not so sold, the highest available smaller packing value could be used with permissible packing deductions. Freight from factory to depot was not deductible.

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Issues: Whether, after the amendment to the valuation provision, excisable lubricating oil cleared in bulk from the factory and later repacked at depots/packing stations could be assessed on the basis of the price of the smaller packings sold from the depot, or whether the assessable value had to be determined with reference to the condition and price at the time and place of removal from the factory.

Analysis: The valuation rule required assessment on the normal price at the time and place of removal. For goods removed from the factory, the factory gate was the relevant place of removal and the value had to be fixed with reference to the goods as cleared from the factory. Where the statute treated a depot as a place of removal, the time of removal for goods cleared from the factory was still the time of factory clearance, so later repacking at the depot could not alter the assessable value. Packing done only at the depot was therefore irrelevant for valuation when the goods were not packed in that condition at factory clearance. On the facts, the oil was cleared in tankers or in 205 litre barrels; smaller retail packings created later at the depot could not form the basis of assessment. For grades sold in 205 litre barrels, the assessable value had to be based on that price less the cost of barrels. For grades not sold in 205 litre barrels, the value had to be based on the largest available smaller packing, with permissible deductions limited accordingly; transportation from the factory to the depot was not deductible.

Conclusion: The department could not assess the goods on the basis of the depot sale price of the smaller packings. The assessee succeeded on the core valuation issue, subject to assessment being reworked in accordance with the stated valuation method.

Final Conclusion: The valuation demand founded on depot repacking was rejected, and the matter was directed to be reassessed on the basis of factory clearance value and the applicable deductions for packing.

Ratio Decidendi: For excise valuation, the assessable value is determined by the normal price at the relevant time and place of removal, and later repacking at a depot cannot by itself change that value when the goods were not in that packed condition at factory clearance.

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