LexCOMMNR. OF CENTRAL EXCISE, ALLAHABAD versus M/S. SOMAIYA ORGANICS (INDIA) LTD.
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\ » I-- -( ... A COMMNR. OF CENTRAL EXCISE, ALLAHABAD v. MIS. SOMAIY A ORGANICS (INDIA) LTD. NOVEMBER 12, 2007 B [DR. ARIJIT PASAYAT AND D.K .• JAIN,JJ.] t "" Central Excise Act, 1944-s. 4 (1) (b)-EthylAlcohol Denatured (SDS)-Used for manufacture of specified products by the other c manufacturing unit of the assessee-Excise duty on-Payment of on costing basis in terms of r. 6 (b)(i) of Valuation Rules, by the assessee- Revenue demanding on the basis of 6 (b)(i) at the highest price at which SDS was sold by other manufacturers on a particular date- CEGAT_setting aside the levy holding that adoption of highest price D not correct-On appeal, held: CEGATwas required to determine the appropriate price-Since it was not determined, matter remitted for "' fresh consideration-Central Excise Valuation Rules, 1975-r. 6 (b) (i) and (ii). E Respondent-assessee was having two manufacturing units. One was distillery where they used to manufacture Ethyl Alcohol- Denatured (SDS). The stock of SDS was transferred to their other unit i.e. a chemical factory for manufacture of specified chemicals. They were paying excise duty at the time of transferring the stock ofSDS to their other unit and MODVAT credit of the duty paid F was availed in the other unit (chemical factory). The value had been .. arrived at by the assessee for the purpose of Section 4 (1) (b) of --( Central Excise Act, 1944, on costing basis in terms of Rule 6 (b) (ii) of Central Excise Valuation Rules, ·1975 during the relevant period. Show Cause Notice was issued to the assessee, alleging G that assessable value was to be fixed in terms of Rule 6 (b) (i) and not under 6 (b) (ii) and it was proposed to fix the assessable value )... on the basis of the highest price at which SDS was sold by other manufacturers on particular dates. Differential duty was demanded. Commissioner of Central Excise confirmed the demand. H 1068 ,, COMMNR. OF CENTRAL EXCISE, ALLAHABAD v. MIS. 1069 ..> SOMAIY A ORGANICS (INDIA) LTD . Appeal of the assessee was allowed by Customs, Excise and Gold A (Control) Appellate tribunal (CEGAT) holding that the Department adopting the highest price was unsustainable in law. Hence the present appeal. Partly allowing the appeal and remitting the matter, the Court B -+ HELD: CEGAT appears to have taken the stand that one day high price cannot be applied even though Rule 6(b) (i) may apply. CEGAT bad come to the conclusion that no principle has been formulated and expressly no reason has been given. The stress is on nearly ascertainable equivalent as the expression 'ascertainable' .c means ascertained. There may be different rates for .different periods. There may be cases where even for the periods the highest and the average prices may be taken. CEGAT has not determined what would be the appropriate price. By merely discarding the price ~- fixed by the assessing authority the issue does not get solved. What D was required to be seen is as to whether there was any ascertainable price and on what basis it can be ascertained. Even for a period, th~ highest or the average can be taken. That has to be done on the basis of the judicial discretion of the assessing officer which can also be decided by the appellate authority by finding out whether there is E any rationale in the fixation done. In that view of the matter, the approach of the CEGAT is not legally tenable. [Paras 9 and 10] [1073-F, G; 1074-A, C, D, E] CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4975 of F ).. 2002. From the final Order No. 71/2002-A dated 20.2.2002 of The Customs, Excise & Gold (Control) Appellate Tribunal, New Delhi in Appeal No. E/467/2001-A. Nagender Rai, Aruna Gupta and B.K. Prasad for the Appellant. G -\ V. Lakshmi Kumaran, AR. Madhav Rao, Tarun Jain, Monish Panda and Rajesh Kumar for the Respondent. The Judgment of the Court was delivered by H A 1070 SUPREME COURT REPORTS [2007] 11 S.C.R. DR. ARIJIT PASAYAT, J. 1. Challenge in this appeal is to the judgment of the Customs, Excise, and Gold (Control) Appellate Tribunal, New Delhi (in short the 'CEGAT') allowing the appeal filed by the respondents (hereinafter referred to as the 'assessee'). Before the CEGAT challenge was to the order passed by the Commissioner of Central Excise, B Allahabad. 2. Factual background in a nutshell is as follows: The respondents are having two manufacturing units- a distillery at Captainganj and a chemica
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