By TIOL News Service

MUMBAI, MAY 30, 2017: THE appellant manufactured Bulk Drugs and Pharmaceutical formulations and cleared to their unit at Goa, which transaction does not involve sale.

The jurisdictional authorities contended that the value of the goods declared to the excise department was lower than the cost of production and also that the cost statement submitted to the Drugs Control authorities was not disclosed to the excise authority.

A SCN came to be issued invoking the extended period of limitation and alleging that assessable value of bulk drugs cleared by the appellant to their sister unit should have been computed in terms of Rule 6 of the Valuation Rules.The differential duty was confirmed and the duty voluntarily paid by appellant was appropriated.

In appeal, the Tribunal dropped the demand for the extended period and remanded the matter for computation of demand for the normal period of limitation.

The Tribunal had also categorically directed the Commissioner to consider the comparable price of bulk drugs while deciding the valuation dispute. The appellant submitted the price of comparable goods manufactured and cleared by M/s. Kores India Ltd. , the said price is a DPCO price.

However, the adjudicating authority did not accept DPCO price as comparable price and duty demand was confirmed on the value arrived at by the costing method.

Aggrieved, the appellant is again before the CESTAT.

After considering the submissions made, the Bench extracted rule 6 of the Valuation Rules, 1975 and inter alia observed -

++ As per Rule 6(b)(i) when the goods are not sold by the assessee but are used or consumed by the manufacturer himself or on his behalf in the production of other article, the value should be based on the value of comparable goods produced or manufactured by the assessee or by any other assessee and in such case value cannot be computed on the cost of production including notional profit.

++ As per the facts of the case there is no sale of the goods in question by the appellant, therefore, value of comparable goods of other manufacturer has to be accepted as comparable price.

++ The appellant has relied upon the price of M/s Kores India Ltd of the same goods, Ld. Commissioner has brushed aside the same being the DPCO price. We absolutely disagree with this contention … for the reason that law does not make distinction between normal sale price or DPCO price in terms of Section 4(1)(a), DPCO price is sale price, therefore, same is normal sale price in terms of Section4(1)(a), therefore, even though it is DPCO price the same is acceptable as price of the comparable goods and, therefore, same will prevail over the value under Rule 6(b)(ii).

Concluding that for the purpose of comparable price,DPCO price should be accepted, the impugned order was set aside and appeal was allowed.

(See 2017-TIOL-1797-CESTAT-MUM )