valuation of sample missiles

[Kavali Ramanjeneyulu]

clarification may please be provided on the following issue.

M/s BDL is manufacturing missiles and selling to Army based on agreement price. Before clearance of missiles , the assessee is removing the sample missiles ( ex. 5 for one lot) testing purpose and during the test fire, the sample missiles are consumed. The assessee is removing the sample missiles on payment of duty on the cost construction method( cost o production + 10% of the cost) . Now, the question is whether the sample missiles are assessable to duty on cost construction method or on the basis of comparable goods under rule 4 of Valuation rules.I request clarification on the above issue with any legal provisions/case laws/clarifications.

AI Summary

Debate on Missile Sample Duty Valuation: Cost Construction vs. Transaction Value under Central Excise Act Section 4 and Rules 4 & 8. A discussion on the valuation of sample missiles manufactured by a company and sold to the Army raised questions about whether these samples, used for test firing, should be assessed for duty based on the cost construction method or the transaction value of comparable goods. Participants debated the applicability of various rules and sections under the Central Excise Act, including Section 4 and Valuation Rules 4 and 8. Opinions varied, with some suggesting assessment on transaction value, while others emphasized the need for a sequential approach to applying valuation rules, highlighting the complexity of determining the correct method in the absence of a sale.