ORDER
C.N.B.Nair
1. The dispute is with regard to valuation of Twin Blade Cartridges. These cartridges were used in the manufacture of disposable razors. As the twin blade cartridges were not sold as such, their assessable value was determined by the appellant based on the cost of production. An addition of 10% was also made towards margin of profit. The assessable value so determined was accepted by the Central Excise authorities and assessments were finalised and duty paid. Subsequently, a show cause notice was issued holding that the profit o the appellant in the previous year was 14.8% and that profit was required to be added, instead of 10% which had already been added. In adjudication and appellate proceedings it was held that the addition required to be made towards profit was 14.19%. Consequent to this finding, duty demand of over 30,000/- imposed under Rule 1730. Claim for interest under Section 11AB has also been made.
2. The submission of the appellant in the present appeal is that there was no legal or factual basis for the addition ordered in the impugned o riders. It has been pointed out that the twin blade cartridges were a new product manufactured from September, 1992. The appellants, therefore, contend that the profit of the company of the preceding year could not be attributed as the likely profit from the manufacture of the new product. The learned Counsel representing the appellant, submitted that under Rule 6(b) (ii) of the Central Excise Valuation Rules,only the profit, if any, attributable to the manufacture of the goods under assessment could be taken into account while determining the assessable value. She, submits that the profit made in the previous year from the manufacture of other products had no relevance for determining the assessable value of the goods in question. The learned Counsel also submitted that as a matter of fact, the appellant had incurred a loss of over 12% from the sale of disposable razors, in the manufacture of which the twin blades were used. Learned Counsel submitted that in such a situation, it could not also be argued that a profit was being made in the manufacture of twin blades.
3. A perusal of the records of the case confirms that the profit element sough to be added in the impugned order related to the year previous to the production of the goods. In that year the goods under assessment were not been manufactured at all. Further, the profit taken into account by the lower authorities is the gross profit to the appellant from all his activities from several factories while the appellant contends that manufacture of disposable razors turned in only loss. We have already held in our final order No. 589/2000-A dt. 18.10.2000 (2001 (94) ECR 207)(T) that in the absence of a profit, no addition towards notional profit can be made while fixing the assessable value of captivlely consumed goods. In the present case, there is no finding that the appellants made a profit in the manufacture of the goods in question. All the same, they have made an addition of 10% while paying the duty. In these facts and circumstances, we do not find any legal or factual justification for the addition made to the assessable value in the impugned order. In the result, duty demand, penal action and demand for interest made in the impugned order can not be sustained. They are set aside with consequential relief, if any, to he appellant and the appeal is allowed.
(Pronounced & dictated in the open Court).