Assessable value on actual removal date governs surplus motor parts cleared under Rule 196A, not earlier manufacturer price.

Rule 196A of the Central Excise Rules, 1944 governed clearance of surplus excisable goods on payment of duty by tying the applicable rate of duty and tariff valuation to the date of actual removal. Because the rule did not create a separate mechanism for assessable value, the value had to be determined under Section 4(1) on the basis of the price prevailing at clearance, not the earlier manufacturer's price. The interpretive approach applied earlier to Rule 196 was treated as equally applicable to Rule 196A. On that basis, a demand for differential duty was held unsustainable.

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Issues: Whether, for surplus motor vehicle parts cleared under Rule 196A of the Central Excise Rules, 1944, the assessable value was to be determined on the basis of the price prevailing on the date of actual removal or on the earlier manufacturer's price, and whether the demand for differential duty was sustainable.

Analysis: Rule 196A permitted clearance of surplus excisable goods on payment of duty and provided that the rate of duty and tariff valuation, if any, would be those in force on the date of actual removal. The Rule did not specify any different date for determining assessable value. The same interpretive principle earlier applied under Rule 196 was held equally applicable to Rule 196A, because in both situations the rule addressed only the rate of duty and tariff valuation, not a separate assessable value mechanism under Section 4(1) of the Central Excise Act, 1944. In the absence of any contrary provision, the assessable value had to be taken as the price prevailing on the date of clearance.

Conclusion: The demand for differential duty was not sustainable and the appeal succeeded.

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