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Valuation under Supply & Apply Contract

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Central Excise – Valuation under ‘Supply and Apply Contract’ - appellant was undertaking job work of painting by engaging various contractors on Supply and Apply contracts - clearances adopting valuation Section 4 of the CEA, 1944 by resorting to Rule 8 of Central Excise Valuation Rules, 2000 - Department contentions that the valuations should be under Rule 11 – demand of differential duty

HELD - the value adopted by the appellants under Rule 8 of the Central Excise Valuation, 2000 was not in order - since the application of paint contains labour costs, the assessable value is to be determined under Rule 11 only after deduction of the value of labour component from the total value for supply and apply - since the sale of product viz. paint is linked to the application part of the paint at the customer’s site, the application is in relation to the goods and therefore, except the value of the labour component for application no other component can be deductible from the sale value for arriving at assessable value - demands of duty and interest liability confirmed – appeal dismissed

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Guest Wednesday, 18 September 2019

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