COMMISSIONER OF CENTRAL EXCISE, ALLAHABAD versus M/S J.R. ORGANICS LTD.

Citation: [2023] 2 S.C.R. 1 · Decided: 01-03-2023 · Supreme Court of India · Bench: S. RAVINDRA BHAT · Disposal: Dismissed

Cited by 4 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

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[2023] 2 S.C.R. 1
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COMMISSIONER OF CENTRAL EXCISE, ALLAHABAD
v.
M/S J.R. ORGANICS LTD.
(Civil Appeal No. 8502 of 2009)
MARCH 01, 2023
[S. RAVINDRA BHAT AND DIPANKAR DATTA, JJ.]
Central Excise Rules, 1994 – r. 6(p)(ii) – Determining the
value of the spirit –Respondent was engaged in the manufacture of
organic chemicals and for which purpose it was necessary to
procure specially denatured spirits from its unit at Kaptanganj –
The dispute arose when the commissioner had, for the purpose of
determining the value of the spirit, determined the highest rate of
the denatured spirit prevalent at another unit on the specific date –
Aggrieved by it, the respondent approached Customs Excise &
Services Tax Appellate Tribunal, which allowed the plea of the
respondent holding that the price was to be determined at the most
conservative price and not at the highest of the prices as it will lose
the character of the normal price – Aggrieved by the decision, the
appellant approached the Supreme Court – Held : Decision of the
tribunal upheld, the most conservative price is to be taken into
account while determining the value of the goods – CESTAT
approach and conclusions, cannot be faulted with – Appeal
dismissed.
A.K. Roy  v. Voltas Limited (1973) 3 SCC 503 : [1973] 2
SCR 1089 – relied on.
Union of India v. Delhi Cloth and General Mills (1963)
1 Suppl. SCC 586 – referred to.
Vacuum Oil Company v. Secretary of State for India AIR
1932 PC 168 – referred to.
Case Law Reference
[1973] 2 SCR 1089
relied on
Para 7
(1963) 1 Suppl. SCC 586
referred to
Para 8
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SUPREME COURT REPORTS
[2023] 2 S.C.R.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 8502
of 2009.
From the Judgment and Order dated 27.07.2009 of the Customs
Excise & Service Tax Appellate Tribunal, Principal Bench, New Delhi
in Excise Appeal No. 467 of 2001.
N. Venkatraman, A.S.G., Mukesh Kumar Maroria, Rupesh Kumar,
Adit Khorana, Vanshja Shukla, Ms. Preeti Rani, Santosh Kumar, Dharma
Datta Verma, Advs. for the Appellant.
V Lakshmikumaran, Ms. Charanya Lakshmikumaran, Ms.
Apeksha Mehta, Ms. Falguni Gupta, Ms. Neha Choudhary, Advs. for
the Respondent.
The Judgment of the Court was delivered by
S. RAVINDRA BHAT, J.
1. The revenue has filed this appeal, aggrieved by the order of
Customs Excise & Service Tax Appellate Tribunal (CESTAT), Principal
Bench, New Delhi dated 27.07.2009. CESTAT had rendered its Order
dated 12.11.2007 upon a remand order by this Court in CA No. 4975/
2002.
2. The respondent-assessee manufactures organic chemicals for
the purposes of which it sources Specially Denatured Spirits (hereinafter
‘SDS’) produced, inter alia,from its unit at Kaptanganj, Uttar Pradesh.
To manufacture SDS one of the essential raw materials required is
molasses. The assessee was issued three show cause notices covering
the following period :-
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3. The respondent-assessee, contended that upon a proper
valuation in terms of Rule 6(p)(ii) of the Central Excise Rule, 1994, the
value of SDS was determinable on the basis of its in-house production at
Kaptanganj. The order in original, however, held otherwise, confirming
the demand made in the show cause notices. Since the first show cause
notice covered an extended period, penalty too was imposed. Aggrieved,
the assessee approached CESTAT which, by its order dated 20.02.2002
allowed the appeal holding that the method adopted by the Commissioner
was incorrect. The Commissioner had for the purposes of determining
the value of SDS, determined the highest rate of the product of SDS
prevalent in another unit at Sarai District, Gorakhpur, on a specific date.
4. The revenue’s appeal was allowed by this Court which remanded
the matter for fresh consideration, inter alia, observing that the mere
rejection of the highest rate was insufficient and the Court had to decide
on the basis of judicial discretion of the assessing officer, whether there
was any rationale in the fixation done and what was the appropriate
method of valuation.
5. CESTAT in the second round, after remand held, inter alia, as
follows after considering the evidence on the record :
“The normal price of the goods is the price at which the
goods are ‘ordinarily’ sold in the course of wholesale trade,
it is a sort of representative price of the course of wholesale
trade. It is a sort of representative price of the goods during
a particular period. Hon’ble Supreme Court in the case of
A.K. Roy ad another vs. Voltas Limited (supra), in para ‘

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