Transaction value under excise valuation cannot be rejected by price circulars, and drawback on deemed exports is not additional consideration.

Under the amended Section 4 of the Central Excise Act, assessable value is based on the transaction value actually paid or payable, and not on indicative price circulars unless the department shows that the invoice price is not the true price. Where the notice did not allege any amount over and above the invoice price, declared values could not be rejected merely for want of supporting records. Different prices for replacement clearances, special contracts and spill-over supplies were consistent with commercial practice. Drawback received on deemed export clearances was not consideration flowing from the buyer and therefore could not be added to assessable value. The differential duty demand was unsustainable.

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Issues: Whether, under the amended valuation regime in Section 4 of the Central Excise Act, 1944, the assessable value had to be fixed with reference to the price circulars and whether drawback or other statutory benefits received on deemed export clearances could be treated as additional consideration.

Analysis: The amended Section 4 replaces the former concept of normal price with transaction value for each removal, namely the price actually paid or payable for the goods, including only amounts payable by or on behalf of the buyer in connection with the sale. Where the show cause notice and the order did not allege receipt of any amount over and above the invoice price, there was no basis to discard the declared transaction values merely by comparing them with indicative price circulars. The burden remained on the department to show that the invoice prices were not the true prices, and the absence of every supporting document from the assessee could not by itself justify rejection of the declared values. The explanation that different prices were charged for replacement clearances, special contracts, and spill-over supplies was consistent with commercial practice and with the statutory acceptance of differing transaction values. The drawback received from the statutory authorities on deemed export supplies was not an amount flowing from the buyer to the assessee and therefore could not constitute additional consideration.

Conclusion: The differential duty demand was not sustainable, the drawback could not be added to assessable value as additional consideration, and the assessee succeeded on the valuation issue.

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