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TMI Blog2005 (3) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... when the figures relating to profits of the assessee were available. Only to this extent, we remit the matter to the Commissioner of Central Excise, Meerut, who is directed to decide this limited issue in accordance with law. However, this exercise of recalculating the profits shall be limited to under-priced bottles and not to the bottles which have been found to be correctly valued in the impugned order of the Commissioner [See : United Glass v. Collector of Central Excise reported [1995 (1) TMI 69 - SUPREME COURT OF INDIA] Thus the appellant succeeds, the impugned judgment of the Tribunal dated 13-8-1999 is set aside, with no order as to costs. - 894 of 2000 - - - Dated:- 11-3-2005 - S.N. Variava, Dr. A.R. Lakshmanan and S.H. Kapadia, JJ. [Judgment per : S.H. Kapadia, J.]. - The issue involved in this civil appeal filed by the Department under Section 35L(b) of the Central Excise Act, 1944 is - whether M/s. Universal Glass Ltd. (assessee herein) was right in valuing the bottles manufactured and supplied by them to M/s. Jagatjit Industries Ltd., Kapurthala (for short "JIL") by relying upon the prices charged by the assessee to companies, like Dabur, Hamdard, Maaza, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ificial market. In this connection, it was found that the packing costs were borne by the JIL, which circumstance, indicated complete control of JIL. That, sale prices of the bottles supplied to JIL were not revised though there were periodic revisions for bottles supplied to "other buyers". During 1992-93, 24 types of bottles were supplied to JIL out of which there were no sales for 19 types. During 1993-94, there were no sales for 16 types out of 19 types of bottles. That, in most of the cases, price lists were filed by the assessee either in part-I or in part-II without sales in fact taking place and yet such price lists were relied upon by the assessee for clearances of bottles to JIL. The Commissioner further found that there were no comparable manufacturers of the bottles in the vicinity in terms of capital investments, shape and size of the bottles etc. That, the assessee had sold Maltova and Viva jars to M/s. ASA and placed reliance on price lists in part-II which the assessee could not have done as the bottles sold to M/s. ASA were re-sold to JIL. In the circumstances, the Commissioner came to the conclusion that the entire exercise undertaken by the assessee was with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er submitted that out of 24 types of glass bottles and jars supplied to JIL during 1992-93, 19 types of bottles were supplied without any sales contracts; that sales to M/s. ASA were no sales as bottles meant to be supplied to M/s. ASA were dispatched to JIL. Hence, according to the learned Counsel, the prices at which the bottles were supplied to M/s. ASA could not form the basis for assessment of the bottles supplied to JIL. Learned Counsel farther submitted that the bottles covered by sales to JIL, M/s. ASA and franchisee holders could not be compared with the sales to "other buyers" like Dabur, Hamdard, Maaza, Kissan etc. It was contended that no comparable goods were available at the material time. That, in some cases, bottles were sold at the prices below their costs and, therefore, such prices could not have formed the basis for assessment. It was urged that the Commissioner had examined the matter from each and every angle including costing and, therefore, interference by the Tribunal was uncalled for. 10.Shri R. Parthasarthy, learned Advocate for the assessee submitted that there were four categories of buyers, namely, JIL, their franchisees, M/s. ASA and "other buyers" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the bottles made by the assessee were comparable with the bottles made by other manufacturers. 12.The concept of "value" in the 1944 Act, as it then stood, was related to the price at which goods were capable of being sold. The said value was not restricted to the manufacturing costs plus net-profits but it covered various expenses on components which contributed to the increase in the market price, that is to say, expenses on components which contributed to "value addition". For determination of the value, where the normal price was not ascertainable for the reasons that such goods were not sold in the market or for any other reason, the nearest ascertainable equivalent thereto was required to be taken into account, in the manner prescribed, and accordingly in the case of captive consumption, the "value" for assessment of duties had to be equivalent to "the normal price" as defined under Section 4(1)(a) of the Act. Accordingly, the 1975 Rules had to be applied for computing the value of the bottles manufactured by the assessee and consumed by JIL. 13.Under Rule 6(b) of the said 1975 Rules, applicable to this case, the first option was to value the goods on the normal price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the bottles supplied to JIL on one hand and bottles supplied to "other buyers" on the other hand are the same, still the size and the shape of the bottles would make the relevant difference. JIL is a liquor manufacturer whereas Kissan, Dabur, Hamdard etc. are manufacturers of food and medicinal preparations. Therefore, the shape and size of the bottles supplied to JIL cannot be compared with the shape and size of the bottles supplied to Kissan, Dabur, Hamdard etc. Even the thickness of the glass of the bottles supplied to a liquor manufacturer would be different from the thickness of the glass of the bottles supplied to a manufacturer of drugs/food products. Rule 6(b)(i) casts a duty on the department to approve the assessable value and it is for the department to find out whether there are goods comparable to the assessee's goods. However, the proforma of the price list in part VI(a) under the heading "comparable goods, if known to the assessee" indicates that the particulars of comparable prices have to be given by the assessee. In terms of Rule 6(b)(i), such value has to be of comparable goods manufactured by the other assessee. 17.In the present case, the department has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of similar goods were not available. Under the above circumstances, the Tribunal should not have interfered with the well reasoned order of the adjudication passed by the Commissioner. 18.Before concluding, we may refer to one of the arguments advanced on behalf of the assessee. It was urged that the costing method adopted by the Commissioner was faulty inasmuch as the assessable value calculated by him was inter alia based on the profits of JIL and not on the profits of the assessee. It was urged that the assessee was a division of JIL. That, the assessee had submitted its profit and loss account with its written submission on 22-10-1996 which accounts have been brushed aside by the Commissioner stating that they were prepared after the earlier round of litigation and, therefore, reliance cannot be placed on such accounts. 19.As stated above, in the present case, since there were no comparable prices available for determining the normal price under Rule 6(b(i), the only alternative was to decide the value under Rule 6(b)(ii) by adopting the best judgment principle based on the cost of production and the profits which the assessee would have earned. In the circumstances, when t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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