COLLECTOR OF CENTRAL EXCISE Vs. DAURALA SUGAR WORKS

JUDGEMENT

(1.) COLLECTOR of Central Excise, Meerut passed an order -in -original No. 1/95 confirming the demand of Rs. 9,36,241 /50 under Section 11A of the Central Excises Act, 1944 (for short, the Act). Collector (Appeals), having confirmed this order, the Department has filed the present appeal.

(2.) RESPONDENT is engaged In the manufacture of sugar, molasses being a by -product. The dispute in this appeal relates to the period March, 1994 and April, 1994. The period in question was governed by order issued by the U.P. State Government under the provisions of the Uttar Pradesh Sheera Niyantran Adhiniyam 1964 (Act 24 of 1964), directing the sugar mills to sell 65% of the molasses produced as per the prescribed quota at the price of Rs. 32.00 per quintal and allowing the sugar mills to sell the remaining 35% in open market. The respondent used 35% of the molasses captively for manufacture of other products on the strength of gate passes declaring the value under Rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975, adopting the value as Rs. 32.00 per quintal. Notice dated 7 -9 -1994 was issued to the respondent stating that another producer of molasses had sold free quota molasses at Rs. 245.00 per quintal and respondent should also pay excise duty on the free quota at the same value. Differential duty on this basis was calculated and proposed to be demanded. Respondent resisted the notice contending that according to Rule 6(b)(i) of the Rules, value should be the value at which the respondent has sold the goods and respondent had sold at Rs. 32.00 per quintal. Alternatively, it was contended that the respondent had purchased molasses out of free quota of another manufacturer at Rs. 165.00 per quintal and in the event of the respondent's contention not being accepted, valuation should be at Rs. 165.00 per quintal. Both the lower authorities overruled these contentions. The demand proposed was confirmed.

(3.) IT is submitted by the learned counsel for the respondent that under Rule 6(b)(i) of the Valuation Rules, value should be based on the value of comparable goods produced or manufactured by the assessee or by any other assessee. He also contended that under proviso to Section 4(1)(a) of the Act, where goods are sold by the assessee at the price fixed under any law, the price or the maximum price, as the case may be shall be deemed to be the normal price in relation to the goods so sold. It is contended that since the price fixed or the controlled price shall be deemed to be the normal price and since the goods are comparable goods produced by the assessee, such fixed price should be the basis of valuation under Rule 6(b)(i) of the Valuation Rules. Shri T.R. Malik, SDR rebutted the above contentions and contended that the control price is the deemed price only for the purpose of demand of excise duty on the goods required to be sold at fixed prices and that price be regarded as the normal price for other purposes, that is, price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade and as such, fixed price at which the respondent sold 65% of the produce should be rejected and the ordinary price at which another assessee sold 35% of his production of goods should be adopted under Rule 6(b)(i) of the Rules.