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TMI Blog1997 (3) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Respondent is engaged in the manufacture of sugar, molasses being a by-product. The dispute in this appeal relates to the period March, 1994 and April, 1994. The period in question was governed by order issued by the U.P. State Government under the provisions of the Uttar Pradesh Sheera Niyantran Adhiniyam 1964 (Act 24 of 1964), directing the sugar mills to sell 65% of the molasses produced as per the prescribed quota at the price of Rs. 32.00 per quintal and allowing the sugar mills to sell the remaining 35% in open market. The respondent used 35% of the molasses captively for manufacture of other products on the strength of gate passes declaring the value under Rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975, adopting the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods are comparable goods produced by the assessee, such fixed price should be the basis of valuation under Rule 6(b)(i) of the Valuation Rules. Shri T.R. Malik, SDR rebutted the above contentions and contended that the control price is the deemed price only for the purpose of demand of excise duty on the goods required to be sold at fixed prices and that price be regarded as the normal price for other purposes, that is, price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade and as such, fixed price at which the respondent sold 65% of the produce should be rejected and the ordinary price at which another assessee sold 35% of his production of goods should be adopted under Rule 6(b)(i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee has no infirmity of any kind, the intendment of the Rule is that such value should be accepted. If the assessee does not produce and sell comparable goods or where the value of such comparable goods has some infirmity and, therefore, cannot be accepted, then the valuation should be based on the value of comparable goods produced by any other assessee. There is evidence in this case to show that other assessees sold molasses of second grade at varying prices, namely, Rs. 150.00 per quintal, Rs. 160.00 per quintal, Rs. 165.00 per quintal and Rs. 245.00 per quintal. The respondent sold 65% of the comparable goods at fixed price as required by law at Rs. 32.00 per quintal. According to him, this price is deemed to be the normal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee in the course of wholesale trade for delivery at the time and place of removal at a price fixed under any law for the time being in force or at a price, being the maximum price, fixed under any such law, then, notwithstanding anything contained in clause (iii) of this proviso, the price of the maximum price, as the case may be, so fixed, shall, in relation to the goods so sold, be deemed to be the normal price thereof. 7. The assessable value for the purpose of Section 4(1)(a) shall be the normal price, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal. Proviso (ii) deals with a situation where the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nite purpose ........... a legal fiction is to be limited to the purpose for which it was created and should not be extended beyond that legitimate field. In Union of India v. Sampat Rai Dagar, 1992 (58) E.L.T. 163 (S.C.) = AIR 1992 SC 1417, the Supreme Court construed the provision in clause 5(3)(ii) of the Imports (Control) Order which provided that it shall be deemed to be a condition of every import of which a licence is granted shall be the property of the licensee at the time of import and thereafter upto the clearance through Customs and held that the fiction created was for the proper implementation of the Imports (Control) Order and the Imports and Exports (Control) Act, 1947 and to hold the licensee responsible for anything and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med normal price being adopted as the basis for valuation of goods not sold at all or sold at price different from the statutorily fixed price. Adoption of consequence of the legal fiction, i.e. the deemed normal price, to value goods not sold or sold at a different price would be impermissible as it would amount to extension of the legal fiction beyond the purpose for which it is created. This inherent limitation of the fictional normal price or value must be read into the scheme of Rule 6(b)(i) of the Rules, as otherwise it would amount to extension of the fictional normal price or value to goods not sold at the statutorily fixed price or maximum price. The deemed normal price or value has this infirmity. It must follow the captively cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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