Circular No. 526/22/2000-CX

F.NO. 386/33/97-JC
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs

New Delhi, the 19th, April, 2000

Subject: Assessable Value — to the value of goods finally cleared from factory

It is directed to invite your kind attention to the Supreme Court’s decision in Civil Appeal No. 7282/96 in the matter of M/s Sidhartha Tubes Ltd. Vs. CCE decided on 3rd November, 1999. The Apex Court vide this impugned order has dismissed party’s appeal with costs.

2.  In this case the assessee was engaged I the manufacture of mild steel pipes and tubes. About 30% of the production was cleared at that stage as black pipe. The balance production was taken to separate shed in assessee’s premises/factory and galvanised. The assessee contended the clearance of the galvanised pipes as black pipe as in their view the process of galvanisatoin is not a process of manufacture and no addition can be made to the assessable value of the black pipe on account of the galvanisation that subsequently occurred. However, the Tribunal rejected their contention.

3. The assessee agitated the matter before the Apex Court. The honourable Apex Court, in its order mentioned above has held that even if manufacture may be complete at some stage and excise duty leviable at that stage, but if assessee subjects the goods to some further process before marketing – where such process does not amount to manufacture – duty has to be paid on value of goods being cleared for marketing and not just on value when manufacture was technically complete. This is an important decision of the apex court which upholds the Tribunal decision reported in 1996 (82) ELT 399 and reiterates the right to levy duty on the value of goods in the form finally cleared from the factory.

4. The Board desires that above mentioned apex court decision may be circulated to lower field formations. Please acknowledge the receipts of the circular.

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