FOB export price can be used for excise valuation of domestic clearances when no comparable imported goods exist.

For central excise valuation of instant coffee cleared by a 100% export-oriented unit into the domestic tariff area, the assessable value may be based on the FOB export price rather than the domestic sale price where no identical or similar imported goods are available. Section 3 of the Central Excise Act, read with the customs valuation framework, requires valuation on an import-parity basis, and a fully commercial FOB price can serve as a comparable value. The Indian selling price cannot be adopted contrary to the valuation rules and the department's earlier acceptance of the FOB-based assessment. On that basis, the duty demand based on domestic sale price was held unsustainable.

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Issues: Whether the assessable value of instant coffee cleared in the domestic tariff area by a 100% export-oriented unit was to be determined on the basis of the domestic sale price or the FOB export price for central excise duty purposes.

Analysis: Section 3 of the Central Excise Act, 1944 requires valuation of goods sold in the domestic tariff area as if they were imported into India. There were no imports of identical or similar goods, and the FOB export price was a fully commercial price capable of representing the likely import price. The Board's circulars also supported acceptance of a comparable invoice value for assessment. Rule 8 of the Customs Valuation Rules, 1988 negates adoption of Indian selling price as the basis, and the Revenue's shift to domestic sale price was inconsistent, particularly when the FOB value had earlier been accepted and duty had been paid on that basis.

Conclusion: The FOB export price could be adopted for valuation, and the demand based on the domestic sale price was not sustainable.

Final Conclusion: The appeals succeeded and the duty demand was set aside with consequential relief.

Ratio Decidendi: Where no identical or similar imported goods are available, a fully commercial FOB export price may be accepted as the assessable value for domestic clearances, and the Indian selling price cannot be adopted contrary to the valuation rules and the consistent assessment practice accepted by the department.

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