2015 (2) TMI 521 - AT - Central Excise

Demand of differential duty - Levy of duty on molasses - Held that - When the prevailing price of the molasses was at ₹ 100 per metric tone, the appellant have sold the molasses at much reduced price of ₹ 10 per metric tonne and have paid duty on this basis for which there is no justification. We find that it is not disputed that during the period of dispute there was control of the State Excise Authorities over the production storage and sale of molasses and that sale of molasses, in question, at reduced price was under intimation to the State Excise Commissioner. It is seen that in the sale invoices of the molasses, the same has been mentioned as of second grade. In this case, there is neither allegation nor there is any evidence that the sale of the molasses was not to independent buyers and that the price was not the sole consideration of sale. When it is not disputed that the sale was to independent buyers and price was the only consideration for sale and was not influenced by any other consideration, in our view, there would be no justification for rejecting the sale price and adopting the comparable price at which the molasses was being sold by other manufacturers as the assessable value. Moreover, when the sale invoices show the molasses sold on of second quality, if the Department alleges that it was of first quality, and therefore, must have been sold at much higher price, it is for the Department to produce evidence in this regard, which has not been done. - Impugned order not sustainable - Decided in favour of assessee.

Summary

Issues:
1. Dispute over Central Excise duty payment for molasses sold at a lower price.
2. Allegation of selling molasses below prevailing market price.
3. Control of State Excise Authorities over production, storage, and sale of molasses.
4. Appellant's plea regarding the quality and pricing of the molasses.
5. Adjudication by Deputy Commissioner and subsequent appeal to Commissioner (appeals).
6. Ex-parte decision due to non-appearance of the appellant.
7. Defense of impugned order by the Department.
8. Consideration of sale price and quality of molasses in determining assessable value.
9. Comparison with similar cases and relevant legal precedents.

Analysis:
1. The appellant, a sugar manufacturer, faced a dispute regarding Central Excise duty payment for molasses sold between March to August 1996. The Department alleged that the appellant sold molasses at a lower price than the prevailing market rate, leading to a duty demand and penalty imposition. The appellant argued that the sale price was under the control of the State Excise Authorities, and the molasses sold were of second quality, which was communicated to the State Excise Commissioner.

2. Upon adjudication by the Deputy Commissioner, the duty demand was confirmed, and a penalty was imposed. The appeal to the Commissioner (appeals) resulted in dismissal, leading to the filing of the current appeal. However, the appellant did not appear for the hearing, resulting in an ex-parte decision as per CESTAT Procedure Rules, 1982.

3. The Department defended the impugned order, emphasizing the discrepancy between the sale price of &8377; 10 per metric tonne and the alleged prevailing price of &8377; 100 per metric tonne. The Department also questioned the lack of evidence regarding the quality of the molasses being sold as second grade.

4. The Tribunal analyzed the case, considering the control of State Excise Authorities over molasses production and sale, the intimation of sale price to the State Excise Commissioner, and the mention of second-grade quality in sale invoices. Referring to a relevant legal precedent, the Tribunal highlighted that if the sale was to independent buyers and the price was the sole consideration, there was no justification for rejecting the sale price based on comparable prices of other manufacturers.

5. Ultimately, the Tribunal found the impugned order unsustainable, setting it aside and allowing the appeal. The decision was based on the lack of evidence supporting the Department's claims regarding the quality and pricing of the molasses, emphasizing the importance of considering the specific circumstances of the sale in determining the assessable value for duty calculation.