Customs, Excise and Gold Tribunal - Mumbai
The Morarjee Goculdas Spg. Wvg. Co. Ltd. vs Commissioner Of Customs And Central ... on 1 June, 2004
Equivalent citations: 2004(172)ELT50(TRI-MUMBAI)
ORDER S.S. Sekhon, Member (T)
1. After hearing both sides and considering that the issue is valuations of samples of fabrics removed for supply to traders by a manufacturer of fabrics. The size of this cut pieces are not exceeding 50CMS in length. They were cleared as per value applicable to Fents which were being cleared by the appellant. Fents as per understanding of the trade and Central Excise are bona fide cut pieces/remmnants of textile from 45Cms. to 90 cms. in length. Revenue wants the declared assessable values to the rejected values, as applicable by applying proportionate value of good textile. The lower authorities have confirmed the demands based on the fact that samples are cut from good cloth, for which comparable prices are known. The rational behind calculation of value on the basis of average rate of rags/fents was not acceptable, since the cloth in the sample pieces would not change in class or category. The value should be as per good cloth which was capable of being sold in ordinary commercial transaction. The Commissioner (Appeals) followed his earlier order and has confirmed the valuation based on the same, as follows:
"The issue contained in F.No.714/M-I/98 is a valuation matter. I find that the subject issue in respect of same appellants had already been decided in the earlier appeal petition contained in F.No. 400/M-I/97 and 548 97. The relevant findings in the said orders is given below:
"6 While it is acceptable that the samples even though drawn from the base fabrics, are comparable in nature to the same categories of fabrics, however, samples by the nature of their sizes and different packing, as also their utility as an item for display only would need to be treated as a different class of goods. Accordingly, the prices charges for the base fabrics for delivery at factory gate would not ipso facto also be applicable to the prices in respect of samples (drawn from such fabrics) in requirement of Section 4 of the Act. This section provides for ascertainment of normal prices of export goods ordinarily sold by the assessee in the course of wholesale trade at the delivery and place of removal, provided the buyer is not related and the prices are the sole consideration for sale. If the value is not ascertainable under sub Clause 4(1)(a), inter-alia, for the reason that such goods are not sold, then the nearest ascertainable equivalent is required to be arrived at by application of the Central Excise Valuation Rules. The assessable value in respect of samples would need to be determined under the requirement of Section 4(1) (b), and with reference to Rule 7 which provides that the value be determined by application of the best judgment principle. In arriving at the best judgment, the provision of Sub-rule 6(b) (i) should be applied. The value of comparable goods sold by the appellants at the factory gate is available. A proper officer is thereafter required to make adjustment as appear reasonable after taking into consideration of relevant factors, in respect of goods to be assessed and the comparable goods. In the present case, the only factor which needs to be considered is the difference in the cost of packing of samples in arriving at the nearest ascertainable equivalent. In case the cost of packing is shown to be less than that in case of normal packing of fabrics, abatement in price can be given on this consideration, otherwise the price thereof should be maintained at the same level as the price of comparable fabrics sold by the appellants in the case of the normal trade. Appellants will have the option for re-determination of their assessable value for samples on this criteria".
held that the findings given above shall be equally applicable in regulating the duty liability on samples referred in the present appeal.
2. After hearing both sides and considering, it is found:
[a] Rags/fents are never equated, value wise or quality wise with prime quality textile. Once the valuation of rags and fents which are also remnant pieces of good quality fabrics is accepted, to be at rate less than that applicable to good quality fabric there is no reason to arrive at the valuation as per the rule on captive consumption i.e Rule 6(b) in these case as arrived at by the Ld. Commissioner comparative price of rags and tents are available. The samples pieces are more akin to rags/fents then good quality cloth in both. Therefore the question of applying pro-rata of good quality fabrics under Rule 4 of the Valuation Rules cannot be upheld. The sample pieces upto 50 cms. under length would be more akin to rags/fents. The prices for such fents being sold, would be more appropriate valuation assessed on comparable goods valuation basis under Rule 4. Therefore no merits are found in upholding the orders of the lower authorities.
[b] Before parting with this appeal we would like to observe that sample cut pieces of fabrics may be classifiable as new rags under heading 63.10 of the Tariff and the entire basis of working out these demands may not be appropriate. However the issue of classification is not before us. We would part with this appeal as it is.
3. In view of the findings the order is set aside and the appeal allowed.
(Pronounced in Court)