Duty drawback not part of assessable value for wires and cables

The Appellate Tribunal CEGAT, New Delhi held that the duty drawback amount received by M/s. Universal Wires and Industries should not be included in the assessable value of the wires and cables they manufactured and supplied. The Tribunal found that the duty drawback scheme was separate from the contract price for the electric wires and was not considered additional consideration flowing from the buyer to the assessee. Therefore, the appeal was allowed in favor of M/s. Universal Wires and Industries, Patna.

---

---

Issues:
- Inclusion of duty drawback amount in the assessable value of wires and cables.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi involved the question of whether the duty drawback amount received by M/s. Universal Wires and Industries should be considered in the assessable value of the wires and cables they manufactured and supplied. The Collector of Central Excise (Appeals), Calcutta had previously held that the duty drawback amount received by the appellants should be included in the assessable value as it was considered an additional consideration flowing from the buyer to the assessee. The appellants had supplied wires and cables to State Electricity Boards for projects funded by I.B.R.D., where the goods supplied were deemed as exports.

The Tribunal noted that the appellants were engaged in the manufacture of wires and cables using excisable and dutiable materials such as aluminium conductors. The cost of raw materials, including any duty payable, had to be part of the assessable value of the finished product. However, in the case of sales made in response to global tenders for World Bank Aided Projects, where Indian parties were encouraged to bid through export benefits like duty drawback, the benefits arising from such sales were not considered a flow back as they were provided by the Government and not the customer.

The appellants argued that the duty drawback they received was on the aluminium rods purchased based on government-fixed prices, which was separate from the contract price for the electric wires. The Tribunal found that the duty drawback scheme was an independent scheme formulated by the Department of Revenue, with separate considerations for incentives, not falling under the provisions of the Central Excises and Salt Act for determining assessable values. Additionally, supplies to I.B.R.D. Aided Projects were governed by separate instructions and aid/reimbursement was provided by the Government of India.

Ultimately, the Tribunal held that the duty drawback amount in question did not need to be added to determine the assessable value of wires and cables. Therefore, the appeal was allowed in favor of M/s. Universal Wires and Industries, Patna.

---