M/S. UTC FIRE AND SECURITY INDIA LTD. versus COMMISSIONER OF CENTRAL EXCISE, BELAPUR

Citation: [2015] 4 S.C.R. 399 · Decided: 10-04-2015 · Supreme Court of India · Bench: A.K. SIKRI · Disposal: Appeal(s) allowed

Judgment (excerpt)

[2015] 4 S.C.R. 399 
M/S. UTC FIRE AND SECURITY INDIA LTD. 
A 
v. 
COMMISSIONER OF CENTRAL EXCISE, BELAPUR 
(Civil Appeal Nos. 4977-4978 of 2004) 
APRIL 10, 2015 
[A.K. SIKRI AND R. F. NARIMAN, JJ.) 
B 
Central Excise Act, 1944: s.4(1)(a),(b) - Valuation of C 
certain goods used captively by the appellant in the turnkey 
contracts - Manufacture of smoke detectors and parts 
thereof and sold by assessee in two distinct streams; in 
loose condition and as part of turnkey projects - In the D 
instant matters, work contract for turnkey project undertaken 
by assessee for setting up of fire fighting system in the 
building wherein smoke detectors and parts used - Basis 
of valuation of smoke detectors and parts thereof - Held: 
The case is not covered u/s.4(1)(a) and is covered u/ E 
s.4(1)(b) -
In view thereof, it is 1975 Rules which is 
applicable - r.4 would be applicable only in those cases 
where value of "such goods" which are sold by assessee for 
delivery at any other time nearest to the time of the 
removal of the goods under the assessment appears to be F 
reasonable to the concerned officer - Here, goods cannot 
be treated as same or would fall within the description "such 
goods" as sold to the other buyers in loose form when they 
are used captively by appellant in turnkey projects -
r. 7 
which deals with 'best judgment assessment' is applicable G 
- Central Excise (valuation) Rules, 1975 - r. 7. 
Allowing the appeals, the court 
399 
H 
400 
SUPREME COURT REPORTS 
[2015] 4 S.C.R. 
A 
HELD: 
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 
B taken into consideration, subject, of course, to the 
condition that the buyer is not a related person and the 
price is the sole consideration for the sale. In this case, 
even the Assistant Commissioner in his final order, 
accepted that the case was covered by Section 4(1)(b) 
C of the Act meaning thereby, he accepted the position 
that normal price of the goods in question was not 
ascertainable. It is only in such a situation that Section 
4(1)(b) of the Act gets attracted. This provision further 
I 
0 
mentions that in such an eventuality, where the normal 
price of the goods is not ascertainable for the reasons 
given in the said provision, the criteria to ascertain the 
price mentioned is the "nearest ascertainable 
equivalent thereof'. This is to be determined in such 
E manner as may b~ prescribed. Manner is prescribed in 
the Valuation Rules, 1975. Rule 4 would be applicable 
only in those cases where value of "such goods" 
which are sold by the assessee for delivery at any 
other time nearest to the time of the removal of the 
F goods under the assessment, appears to be 
reasonable to the concerned officer. Here, the goods 
cannot be treated as same or would fall within the 
description "such goods" as sold to the other buyers 
in loose form when they are used captively by the 
G appellant in the turnkey projects. The only mistake 
which is committed by the Commissioner is to refer to 
Rule 6(b) inasmuch as in the present case, the goods 
are not consumed by the appellant/assessee itself but 
used in the turnkey projects/contracts meant for the 
H third party. Thus, it was Rule 7 which should have 
UTC FIRE AND SECURITY INDIA LTD. v. COMMNR. OF 401 
CENTRAL EXCISE, BELAPUR 
been referred to by the Commissioner (Appeals) as A 
none of the proceeding rules would apply. To put it 
C'therwise, it is the case of 'best judgment assessment'. 
However, that is the exercise otherwise undertaken by 
the Commissioner (Appeals) in accepting the costing of 
the goods which was placed by the assessee/appellant B 
before the assessing officer and it was taken into 
consideration by the Commissioner (Appeals). 
[Paras12, 13] [403-E,F; 408-F-H; 409-A-C] 
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 
C 
4977-4978 of 2004 
From the Judgment and Order No. C-A/148/WZB/04-C-
ll and M/76/WZB/04-C-ll dated 05.05.2004 of the Customs 
Excise and Service Tax Appellate Tribunal, West Regional D 
Bench at Mumbai in Appeal No. E/2727/98 and E/C0-230/ 
~8. 
Somnath Shukla, Alok Yadav, Praveen Kumar for the 
Appellant. 
K. Radhakrishnan, Shweta Garg, Rupesh Kumar, B. 
Krishna Prasad for the Respondent. 
The Judgment of the Court was delivered by 
E 
A. K. SIKRI, J. 1. The 

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