1983 (10) TMI 246 - AT - Central Excise

Summary

Issues:
- Discrepancy in assessable value for captive consumption of sulphuric acid between the appellant and the Department.

Detailed Analysis:
The appeal was directed against the order of the Collector of Central Excise (Appeals), Bombay, regarding the assessable value of sulphuric acid used for captive consumption. The appellant company manufactured sulphuric acid, with a portion used for captive consumption and the rest sold to outside parties. The sales to outside parties were categorized into sales to large bulk buyers and sales in small lots. The price difference between the two categories was significant, with the price for bulk buyers at Rs. 510/- per M.T. and for small buyers at Rs. 575/- per M.T. The dispute arose over the assessable value for captive consumption, with the Department advocating for Rs. 575/- per M.T. while the appellants argued for Rs. 510/- per M.T.

The appellants contended that the Department had initially approved the price of Rs. 510/- per M.T. for bulk buyers when used for captive consumption. However, a subsequent show cause notice led to the Appellate Authority upholding the assessable value at Rs. 575/- per M.T., aligning it with the price charged to small buyers. The Assistant Collector and the Collector (Appeals) did not provide adequate reasoning for selecting Rs. 575/- per M.T. as the assessable value, merely making general references to the law without substantial evidence collection or analysis. The matter was deemed to be straightforward, and the authorities failed to justify their decision adequately.

The Tribunal observed that commercial practices often involve preferential pricing for bulk buyers due to additional expenses incurred when selling in large quantities to outside parties. These additional expenses, such as handling charges, are not applicable to goods used for captive consumption. Therefore, the Tribunal concluded that the assessable value should align with the price charged to bulk buyers, i.e., Rs. 510/- per M.T., for goods used for captive consumption. The Tribunal found the lower authorities unjustified in adopting the higher price of Rs. 575/- per M.T. meant for small buyers. The lack of substantial reasoning in the Collector (Appeals) decision further supported the Tribunal's decision to allow the appeal and set aside the impugned order, granting relief to the appellants.