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TMI Blog2015 (8) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; sales as part of turnkey projects where no separate values are recovered for the sale of these goods but the price of the goods forms part of an overall consideration mentioned for such turnkey contracts. 3. Insofar as the turnkey projects are concerned, the appellant takes the works contracts which are awarded by certain buyers for setting up of the fire fighting system in the buildings. In executing these turnkey projects to set up the fire fighting system, the aforesaid smoke detectors and parts thereof are also used. It is the valuation of these smoke detectors and parts thereof for the purpose of payment of excise duty which is bone of contention. 4. The Assessing Officer had issued six Show Cause Notices dated 29-9-1995, 28-3-1996, 3-6-1996, 2-9-1996, 3-3-1997, 17-7-1997. It was alleged in these Show Cause Notices that since the aforesaid smoke detectors and parts thereof are captively used by the appellant, insofar as the turnkey contracts are concerned, for the purpose of their valuation, the price at which the same smoke detectors and parts thereof are sold by the assessee in loose condition will be treated as price and the excise duty sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Para 11 of the order of the Commissioner which deals with this aspect in detail is reproduced hereunder :- "The appellants have worked out the details of costing in respect of the said items under dispute duly certified by Chartered Accountants even prior to the period of dispute. These prices are also inclusive of margin of 10%, whereas appellants claim is that the margin of profit in respect of the entirely turnkey projects is restricted from 4% to 5%. However, this question is not entirely relevant to the issue. The only relevance is in respect of the question whether the prices determined on costing method for the individual disputed parts as prescribed under Rule 6(b) of the Valuation Rules, can be accepted under the law in cases of turnkey projects. I, accept the merits in the claim of the appellants that the class of buyers, sought to be compared by the Assistant Commissioner, are two different classes. Also, that there is no determination of a single normal price in respect of disputed parts, also supplied for commissioning to turnkey projects at site. Therefore, the only legal acceptable method under the present facts would be to resort to the provisions of the Central E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is as under :- "Applying the Rules, it is found Rule 4 stipulates that 'value' shall be based on value fill goods sold with adjustments. The respondents are contesting that identical goods are not sold. They have not produced any evidence to substantiate the same. The lower authority has fixed the value under rule 4 and no reasons are brought out, before us in this appeal to set aside that fixation. The valuation arrived at as rule 4 is upheld along with consequential duty demands." 10. The only observations which is made in the aforesaid paragraph is that the contention of appellant herein that the goods sold in the loose form are not the same or identical goods which are used in the turnkey projects, is brushed aside with the observations that the appellant-assessee had not been able to produce any evidence to substantiate this. Apart from making this remark, there is no other discussion in the impugned order. It appears that the CESTAT did not even care to read the order of the Commissioner where this aspect was considered in great detail while coming to the conclusion that Rule 4 would not be applicable in the instant case. This can be discerned from the following p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this break up price for realization of payments, these shall only be for relevant for realization of progressive payment from the contracting positing, and shall not be construed for any other purpose." 11. What emerges from the aforesaid discussion is that though in the Show Cause Notice the Assistant Commissioner had mentioned the applicability of Section 4(1)(a) of the Act, even he abandoned that course of action while passing the order. In the final order passed by him, he accepted that the case was covered by Section 4(1)(b) of the Act and therefore, applied the Valuation Rules, 1975. Further, as per him, it is the Rule 4 which was applicable. On the other hand, as per the Commissioner (Appeals), Rule 4 was not applicable and he invoked Rule 6 of the Valuation Rules, 1975. 12. Thus, one thing is clear. It is not a case where Section 4(1)(a) of the Act is applicable. That is the common case of the parties. As per Section 4(1)(a) of the Act, normal prices of the goods, viz., the prices at which such goods are ordinarily sold by the Assessee to a buyer, is to be taken into consideration, subject, of course, to the condition that the buyer is not a related person and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not sold by the assessee but are used or consumed by him or on his behalf in the production or manufacture of other articles, the value shall be based - (i) on the value of the comparable goods produced or manufactured by the assessee or by any other assessee : Provided that in determining the value under this sub-clause, the proper officer shall make such adjustments as appear to him reasonable, taking into consideration all relevant factors and, in particular, the difference, if any, in the material characteristics of the goods to be assessed and of the comparable goods; (ii) if the value cannot be determined under sub-clause (i), on the cost of production or manufacture including profits, if any, which the assessee would have normally earned on the sale of such goods; (c) where the assessee so arranges that the excisable goods are generally not sold by him in the course of wholesale trade except to or through a related person and the value cannot be determined under clause (iii) of the proviso to clause (a) of sub-section (1) of Section 4 of ..... 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