2013 (3) TMI 318 - AT - Central Excise

Molasses captively consumed - demand confirmed after taking into higher price of A grade molasses treating the same as comparable goods - Held that - Agreeing with the contention of the Revenue that for captively consumed the value of comparable goods is taken into consideration but in the present case there is no evidence to show that the molasses which is captively consumed is of A grade. Further, as found in the grounds of appeal, the revenue also submitted at least the lower price of the comparable goods are to be taken for the purpose of assessment. As found from the chart produced by the revenue showing the lowest price of the goods @ Rs. 600/- PMT whereas the applicants are paying duty on the price @ Rs. 850/- PMT no infirmity in the impugned order whereby Commissioner (Appeals) set aside the confirmation of demand in respect of molasses captively consumed by the respondents - appeal of revenue dismissed.

Summary

Issues:
- Valuation of captively consumed molasses for excise duty purposes

Analysis:
The case involved an appeal by the Revenue against an order where the Commissioner (Appeals) set aside the demand confirmation regarding molasses captively consumed by the respondents. The appellants were in the sugar and rectified spirit manufacturing business, with molasses being a by-product liable for excise duty. The dispute arose when show cause notices were issued to the respondents, alleging underpayment of duty due to the lower price at which the respondents were paying duty compared to competitors selling A grade molasses at a higher price. The adjudicating authority confirmed the demands based on this comparison. However, the Commissioner (Appeals) allowed the appeals, citing lack of evidence to establish that the molasses consumed by the respondents were of the same grade as the basis for demanding duty.

The Revenue contended that since competitors were selling A grade molasses at a higher price, the respondents should also pay duty based on that price or at least the lowest price at which the same grade was cleared by competitors. The Revenue relied on a Tribunal decision in a similar case. On the other hand, the respondents argued that there was no evidence to prove that they were using A grade molasses, as their statutory documents declared the molasses as 2nd grade. They maintained that comparing the value of 2nd grade molasses with A grade molasses was not permissible.

In its decision, the Tribunal agreed with the Revenue that for captively consumed goods, the value of comparable goods produced by other assesses should be the basis for valuation. However, the Tribunal found no evidence to support that the molasses consumed by the respondents were of A grade. The Revenue's submission that the duty should be based on the lowest price of comparable goods was also considered. The Tribunal noted that the revenue's chart showed the lowest price at Rs. 600/- PMT, while the respondents were paying duty at Rs. 850/- PMT. Consequently, the impugned order of the Commissioner (Appeals) was upheld, dismissing the appeal by the Revenue. The cross-objections were also disposed of in the same order.