Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | Commissioner Central Excise Act |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Allowed |
Headnote | Central Excise Act, 1944/Central Excise (Valuation) Rules, 1975-Rule 6(b)(ii)-Excise duty-Price declaration by assessee regarding sale to a buyer on the basis of sale to other buyers-Demand of duty by invoking Rule 6(b)(ii) in absence of availability of comparable price-Finding by Revenue that assessee guilty of creating artificial buyers-No other manufacturer of similar goods available-Goods sold to other buyers were different from the goods sold to the buyer-Calculation of assessable value based on the profit of buyer and not the assessee-Tribunal held invoking of Rule 6(b)(ii) not justified-On appeal, held : Invoking of Rule 6(b)(ii) was justified as in the facts of the case no comparable prices were available for determining the normal price-However, assessable value should have been calculated on the basis of profit of the assessee-Hence to this extent matter remitted to the Commissioner of Central Excise. Respondent-assessee was in the business of manufacturing glass bottles and jars. Assessee-Company was a division of another Company (JIL) which was in the business of manufacturing liquor and food products. Assessee-Company filed its price list for assessment purpose valuing the bottles supplied to JIL for captive consumption relying upon the prices charged by assessee to other companies. Revenue demanded differential duty, invoking Rule 6(b)(ii) of Central Excise (Valuation) Rules, 1975. Comparable prices were not available and that the assessee had, with the intention to evade duty, willfully and deliberately filed incorrect price declarations. Upholding the demand, Commissioner held that Revenue was right in invoking Rule 6(b)(ii) as it was not possible to determine the nearest ascertainable value of the bottles under Rule 6(b)(i). The prices of bottles supplied to JIL for captive consumption could not be compared to the price of bottles supplied to either the franchisees of JIL, or to M/s ASA because the franchisees were not independent buyers as the packing cost was borne by JIL and they were put up to create an artificial market because the bottles sold to M/s. ASA were re-sold to JIL and it was set up by the assessee to create an artificial gate price. There were also no comparable manufacturers of the bottles in the vicinity in terms of capital investments, shape and size of the bottles etc. That in most of the cases, price lists were filed by the assessee either in part-I or Part-II without sales in fact taking place and yet such price list were relied upon by the assessee for clearance of bottles to JIL. However, it held that the sale of bottles to other buyers would form the basis of ascertainable value as they were independent buyers. Hence in their case Rule 6(b)(ii) was not invokable. Accordingly the duty demanded was reduced and confined to sales to JIL, their franchisees and to M/s. ASA by applying Rule 6(b)(ii). In appeal, Customs Excise and Gold (Control) Appellate Tribunal held that Rule 6(b)(ii) was not invokable as comparable goods were available; and that there could not have been intention to evade duty as the assessee was entitled to exemption vide Notification No. 217/86 and as the goods were madvatable. In appeal to this Court the questions for consideration were-Whether the price lists of bottles sold by the assessee to JIL for capitive consumption were comparable with the prices of the bottles sold to "other independent buyers"; and whether the bottles made by the assessee were comparable with the bottles made by other manufacturers. Assessee inter alia contended that the costing method adopted by the Commissioner was faulty inasmuch as the assessable value calculated by him was based on the profits of JIL and not on the profits of the assessee. |
Judge | Honble Mr. Justice S.H. Kapadia |
Neutral Citation | 2005 INSC 131 |
Petitioner | The Commissioner Of Central Excise, Meerut |
Respondent | M/s. Universal Glass Ltd., Sahibabad (ghaziabad) |
SCR | [2005] 2 S.C.R. 733 |
Judgement Date | 2005-03-11 |
Case Number | 894 |
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