UNIVERSAL GLASS LTD Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellant M/s. Universal Glass Ltd. is a Division of Jagatjit Industries Ltd. They manufacture glass bottles and jars at their factory at Sahibabad, Meerut and about 50% of their production is captively consumed by Jagatjit Industries, Kapurthala in the packing of goods manufactured by them and the remaining are sold to industrial consumers, Dabar India Ltd., Pure Drinks, Pepsico Foods Ltd., Coca Cola, Punjab Breweries etc. and a small portion to others. The issue involved in the present appeal is the valuation of bottles utilised by Jagatjit Industries. Originally these goods had discharged duty based on the value of comparable goods manufactured and sold by the appellants.

(2.) THE impugned order has demanded differential duty on the ground that value was required to be fixed under Rule 4 (b)(ii) of Central Excise Valuation Rules based on the cost of manufacture and manufacturing profit, while the appellant's contend that the valuation originally done at the value of comparable goods in terms of Rule 6 (b)(i) of Central Excise Rules was correct and should not be disturbed. The impugned order has considered the valuation of the goods under different categories. The first category are the bottles exclusively consumed by M/s. Jagatjit Industries. Originally these goods had been assessed based on the price of similar bottles sold to independent buyers. These bottles are used by Jagatjit Industries as well as the independent buyers for bottling alcohal. The shape, size and other features are the same for the bottles sold as well as utilised by Jagatjit Industries. The only difference is that, on the bottles sold, embossment is made with marks such as "CSD", "J&K Excise" and "Rajasthan Excise" etc. The appellants have pointed out that the comparability of these bottles had been certified by the Superintendent of Central Excise. The appellants submit that the goods being quite similar, the valuation made by adopting the price of goods which were sold to independent buyers, was correct and there was no justification for rejecting the price of similar goods. The Collector has, however, rejected the submission of the appellants on the ground that such prices cannot be relied upon as they were only made to some distilleries for a few varieties under a few gate passes and such prices had not been revised from time to time and that one or two sales can always be made at a loss. The impugned order also observes that the bottles of even same size in terms of volume can have difference in weight. He has, therefore held that there was no price available for comparison in respect of this category of goods and has held that the assessable value is to be determined based on costing.

(3.) THE second category relates to bottles which are consumed by Jagatjit Industries and also sold to Franchisees of Jagatjit Industries. These bottles are identical and are used both by M/s. Jagatjit Industries and their Franchisees for the bottling of same goods, 750 ml. Aristrocrat Triangular, 350 ml. Aristocrat Premium liquors. The appellants submitted that the products being identical and Franchisees being independent public limited companies, the sale price to the Franchisees should be treated as the normal price and applied for the valuation of captively consumed bottles also. They have also submitted that the Franchise agreement between Jagatjit Industries and the Franchisees is with regard to bottling of alcoholic beverages and not with reference to bottles, and that procurement of bottles is a responsibility of the Franchisees and not Jagatjit Industries. Even though the Commissioner has noted that there is force in their submission that the Franchise agreement covers only bottling and sales of liquour and not bottles, he has held that the scrutiny of the Franchise agreement has shown that Franchisee was billed for the cost of liquor only and the cost of bottles, concentrate etc. is being borne by Jagatjit Industries and that there is really no sale of empty bottles to the Franchisees.