1990 (2) TMI 215 - AT - Central Excise

Summary

Issues:
Assessable value of Hydrochloric acid, Captive consumption, Sale to outside parties, Differential duty calculation, Application of Valuation Rules, Factory gate price determination.

Analysis:

The case involved a dispute regarding the assessable value of Hydrochloric acid manufactured by the appellants. The appellants initially consumed the acid captively but later started selling it to outside buyers. The issue arose when show cause notices were issued proposing to adopt the assessable value of Hydrochloric acid approved for another company, leading to a demand for differential duty amounting to Rs. 30,31,421.74.

The main contention was whether the assessable value should be based on the price charged to industrial consumers or on the price approved for another company, Metture Chemicals. The appellants argued that the factory gate price should be considered, citing various legal precedents supporting this argument. They emphasized that the percentage of sales to outside parties was irrelevant in determining the assessable value for captive consumption.

On the other hand, the department argued that Rule 6(b)(i) specifically deals with the value of goods captively consumed and justified following this rule. They contended that since Metture Chemicals sold at a higher price, that value should be used for assessment. The department also highlighted that the appellants had previously declared a higher value for the acid.

The Tribunal held that once wholesale dealings at arm's length are established, the number of wholesale dealings does not affect the determination of the wholesale cash price. It was established through legal precedents that the factory gate price, if genuine, should be the basis for determining the assessable value for captively consumed goods. The Tribunal directed the Asstt. Collector to determine the assessable value based on the price at which the Hydrochloric acid was sold at the factory gate to industrial consumers.

Ultimately, the appeal was allowed, and the order of the Collector was set aside, emphasizing the importance of the genuine factory gate price in determining the assessable value for captively consumed goods.