MORINDA CO-OP. SUGAR MILLS Vs. CCE, CHANDIGARH

JUDGEMENT

(1.) BRIEF facts of the case are that the appellants are engaged in the manufacture of molasses. On 28.12.94 the Central Excise (Preventive) staff from Ropar visited the factory premises of the appellant and scrutiny of the records revealed that the factory had cleared 4065.535 MTs of molasses at various rates during period from March to May 1994 on payment of duty as per bilateral agreement between the distillery units and the Punjab State Federation of Co -op. Sugar Mills Ltd. Chandigarh. Since the sale price of the goods was comparatively low, a show cause notice was issued for recovery of duty short paid by invoking the extended period of limitation. The demand of Rs. 19,34,974 was confirmed on the ground that the assessable value of molasses was required to be determined in accordance with Section 4(1) of the Act read with Rule 7 of the Valuation Rules on the basis of comparable prices of similar goods produced and sold by other manufacturers at the rate of Rs.310 per quintal as compared to the price of Rs.14.40, Rs.100 and Rs.170 per quintal of molasses sold by the appellant. The extended period of limitation was invoked for the reason that the additional consideration in the form of compensation received by the appellant from Punjab Government had not been disclosed to the Department. A penalty of Rs.66,171 was imposed under Section 11AC. The Additional Commissioner noted that the assessee had already debited some amount towards duty and therefore directed adjustment of present duty demand from the amount already debited during the period April 96 to November 98. The lower appellate authority upheld the order of the Additional Commissioner; Hence this appeal.

(2.) WE have heard Shri K.K. Anand, Learned Advocate and Shri P.K. Jain, Learned Departmental Representative. It is not disputed that the sale by the appellants to M/s. SOM Distilleries Bhopal was sale to an independent buyer. It is also not disputed that the price of the goods was the sole consideration. In these circumstances we fail to understand how Rule 7 of the Valuation Rules has been pressed into service by the Department. The question of application of the basis only if the sale was not to an independent buyer and price was not the only consideration for sale. Further, sale of SOM Distilleries, Bhopal was sale in open auction and when the actual price of the goods is available there is no question of resorting of the values of comparable goods particularly when transaction value has not been rejected. We therefore hold that the differential duty demand is not sustainable and accordingly set aside the demand and the penalty. Since we are allowing the appeal on merits, we are not recording any separate finding on limitation.

(3.) IN the result, the impugned order is set aside and the appeal allowed.