Supreme Court of India

THE COMMISSIONER OF CENTRAL EXCISE, MEERUTversusM/S. UNIVERSAL GLASS LTD., SAHIBABAD (GHAZIABAD)

Citation: 2005 INSC 131
Decided: 11 March 2005
Disposal: Appeal(s) allowed
Bench: S N VARIAVA

Holding

When no comparable prices are available, Rule 6(b)(ii) may be invoked and the assessable value must be determined on the basis of the assessee’s cost of production and profit, not on the buyer’s profit.

Summary

Universal Glass Ltd., a manufacturer of glass bottles, supplied 50% of its output to its parent company Jagatjit Industries Ltd. (JIL) for captive consumption and sold the remainder to independent industrial buyers. The assessee valued the bottles sold to JIL by referencing prices charged to the independent buyers, filing price lists under the Central Excise (Valuation) Rules. The Revenue invoked Rule 6(b)(ii) alleging no comparable prices existed, price manipulation and the creation of artificial buyers, and the Commissioner upheld the demand for differential duty. The Customs, Excise and Gold (Control) Appellate Tribunal reversed, holding that comparable sales were available and there was no intention to evade duty. The Supreme Court held that when comparable prices are unavailable, Rule 6(b)(ii) may be invoked, but the assessable value must be based on the assessee’s cost of production and profit, not on the buyer’s profit. Consequently, the Court set aside the Tribunal’s order, remitted the matter to the Commissioner to recompute the value for the under‑priced bottles, and affirmed the validity of invoking Rule 6(b)(ii). The appeal was allowed.

Issues considered

Whether the price lists of bottles sold to JIL for captive consumption are comparable with the prices of bottles sold to other independent buyers under Rule 6(b)(i).
Whether the bottles manufactured by the assessee are comparable with bottles made by other manufacturers.
Whether Rule 6(b)(ii) can be invoked when no comparable prices are available.
Whether the assessable value should be calculated on the profit of the assessee or on the profit of JIL.
Whether the exemption under Notification No. 217/86‑CE and the malvatable nature of the goods affect the valuation.

Legislation cited

Central Excise Act, 1944s. 35L(b), s. 4(l)(a)
Central Excise (Valuation) Rules, 1975s. 6(b)(i), s. 6(b)(ii)

Subjects

central excisevaluationRule 6(b)comparable goodscaptive consumptionartificial buyersassessable valueprofit and loss accountexemption notificationmalvatable goods

Judgment

THE COMMISSIONER OF CENTRAL EXCISE, MEERUT A
v.
MIS. UNIVERSAL GLASS LTD., SAHIBABAD (GHAZIABAD)

MARCH 11, 2005

[S.N. VARIAVA, DR. AR. LAKSHMANAN AND S.H. KAPADIA, JJ.] B

Central Excise Act, 1944/Central Excise (Valuation) Rules, 1975-Rule
6(b)(ii)-Excise duty-Price declaration by assessee regarding sale to a buyer
on the basis of sale to other buyers-Demand ofduty by invoking Rule 6(b)(ii) C
in absence of availability of comparable price-Finding by Revenue that
assessee guilty ofcreating artificial buyers-No other manufacturer ofsimilar
goods available-Goods sold to other buyers were different from the goods
sold to the buyer-Calculation of assessable value based on the profit of
buyer and not the assessee-Tribunal held invoking of Rule 6(b)(ii) not
justified-On appeal, held : Invoking of Rule 6(b)(ii) was justified as in the D
facts of the case no comparable prices were available for determining the
normal price-However, assessable value should have been calculated on the
basis of profit of the assessee-Hence to this extent matter remitted to the
Commissioner of Central Excise.

Respondent-assessee was in the business of manufacturing glass E
bottles and jars. Assessee-Company was a division of another Company
(.JIL) which was in the business of manufacturing liquor and food
products. Assessee-Company filed its price list for assessment purpose
valuing the bottles supplied to JIL for captive consumption relying ut1on
the prices charged by assessee to other companies. Revenue demanded F
differential duty, invoking Rule 6(b)(ii) of Central Excise (Valuation)
Rules, 1975. Comparable prices were not available and that the assessee
had, with the intention to evade duty, willfully and deliberately filed
incorrect price declaratio.ns. Upholding the demand, Commissioner held
th!lt Revenue was right in invoking Rule 6(b)(ii) as it was not possible to
determine the nearest ascertainable value of the bottles under Rule 6(b)(i). G
The prices of bottles supplied to JIL for captive consumption could not
be compared to the price of bottles supplied to either the franchisees of
JIL, or to Mis ASA because the franchisees were not independent buyers
as the packing cost was borne by JIL and they were put up to create an

733 H
734 SUPREME COURT REPORTS [2005] 2 S.C.R.

A artificial market because the bottles sold to Mis. ASA were re-sold to JIL
and it was set up by the assessee to create an artificial gate price. There
were also no comparable manufacturers of the bottles in the vicinity in
terms of capital investments, shape and size of the bottles etc. That in
most of the cases, price lists were filed by the assessee either in part-I or
B Part-II without sales in fact taking place and yet such price list were
relied upon by the assessee for clearance of bottles to JIL. However, it
held that the sale of bottles to other buyers would form the basis of
ascertainable value as they were independent buyers. Hence in their case
Rule 6(b)(ii) was not· invokable. Accordingly the duty demanded was
reduced and confined to sales to JIL, their franchisees and to .M/s. ASA
C by applying Rule 6(b)(ii).

In appeal, Customs Excise and Gold (Control) Appellate Tribunal
held that Rule 6(b)(ii) was not invokable as comparable goods were
available; and that there could not have been intention to evade duty as
the assessee was entitled to exemption vide Notification No. 217/86 and as
D the goods were madvatable.

In appeal to this Court the questions for consideratfon were-
Whether the price lists of bottles sold by the assessee to JIL for capitive
consumption were comparable with the prices of the bottles sold to "other
E independent buyers"; and whether the bottles made by the assessee were
comparable with the bottles made by other manufacturers.

Assessee inter alia contended that the costing method adopted by
the Commissioner was faulty inasmuch as the assessable value calculated
by him was based on the profits of JIL and not on the profits of the
l t
F
I

assessee.
,,
Allowing the appeal, the Court '

HELD : 1. Comparable goods under rule 6(b) should be, as far as
possible, identical goods. Simply because two goods are known by the
G same name or by the same genre, does not mean that they are comparable
goods. Even, if they are assumed to be comparable, all relevant differences
as far as possible should be recognized. In the present case, even if the
capacities 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. Therefore, the
H shape and size of the bottles supplied to JIL cannot be compared with the
C.C.E. v. UNIVERSAL GLASS LTD. 735
shape and size of the bottles supplied to other buyers. Rule 6(b)(i) casts a 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 Vl(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. B
In terms of rule 6(b)(i), such value has to be of comparable goods
manufactured by the other assessees. [741-E-H; 742-A]

2. The Department has found that the,-e were no other
manufacturers of similar bottles. Moreover, in the present case, the
department found price manipulation. Prices of bottles sold to JIL were C
lower than the prices of bottles sold to other buyers. The price increase
of bottles sold by the assessee to JIL was lesser than the price increase of
bottles sold to other buyers. The costing data supplied by the assessee to
the department indicated that the bottles supplied to JIL and their
franchisees were under-priced as the selling and organizational expenses
and bill discounting expenses were not included in the assessable value of D
the goods and, therefore, such prices were not comparable with prices of
the bottles sold to other buyers. The costing done by the assessee itself
indicates the price differential. The price lists filed by the assessee under
part Vl(a) were illusory as they were based on sales which did not exist
or which were meagre. The price lists under part Vl(a) filed by the E
assessee during 1991-92 had no comparable price lists. All supplies shown
under gate passes/invoices in favour of Mis ASA 'Yere actually destined
for JIL. Further, as found by the Commissioner, the franchisee agreements
between JIL and the franchisee hol.ders were not on principal to principal
basis, particularly when the cost of packing was to be borne by JIL. The
Commissioner was right in holding that the assessee was guilty of creating F
artificial buyers. The bottles sold to "other buyers" were different from
the bottles supplied to JIL; in view of the circumstances, the Tribunal
should not have interfered with the well reasoned order of the adjudication
passed by the Commissioner. [742-B-G)

3. Since there were no comparable prices available for determining G
the normal price under rule 6(b)(i), the only alternative was to decide the
\·alue 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 the assessee submitted before the
commissioner its profit and loss account on 22.10.1996, due weightage H
736 SUPREME COURT REPORTS [2005) 2 S.C.R.

A ought to have been given to such accounts. It was not open to the
Commissioner to do the costing on the profits of JIL, particularly, when
the figures relating to profits of the assessee were available. Only to this
extent, the matter is remitted to the Commissioner of Central Excise, to
decide this limited issue in accordance with law. However, this exercise of
B recalculating the profits shall be limited to under-priced bo~tles alone. ·
[743-C-E]

United Glass v. Collector of Central Excise, in (1995) 75 ELT 209,
referred to.

4. The dispute was regarding the correct price declaration. There
C was no dispute of classification. Therefore, the reliance placed by the
Tribunal on the exemption notification no. 217/86-CE as also on the
product being modvatable was totally ill-founded. [740-H; 741-A)

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 894 of
2000.
D
From the Judgment and Order dated 13.8.1999 of the Central Excise,
Customs and Gold (Control) Appellate Tribunal, New Delhi in F.O. No.
1145/99-A in A. No. E/1251 of 1997-A.

K. Swamy, T.A. Khan, B.K. Prasad and P. Parmeswaran for the
E Appellant.
R. Parthasarthy, Alok Yadav and Rajesh Kumar for the Respondent.

The Judgment of the Court was delivered by

KAPADIA, J. The issue involved in thi~ civil appeal filed by the
F department under section 35L(b) of the Central Excise Act, 1944 is -whether
Mis Universal Glass Ltd. (assessee herein) was right in valuing the bottles
manufactured and supplied by them to Mis Jagatjit Industries Ltd., Kapurthala
(for short "JIL") by relying upon the prices charged by the assessee to
companies, like Dabur, Hamdard, Maaza, Kissan etc. (hereinafter referred to
G as the "other buyers") under rule 6(b)(i) of the Central Excise (Valuation)
Rules, 1975 (hereinafter referred to as "the 1975 Rules").

The assessee herein is a division of JIL. It is in the business of
manufacturing glass bottles and jars at its factory in Meerut. During the
relevant period, 50% of its total production was captively consumed by JIL
H (holding company) and the remaining was sold to industrial consumers,
C.C.E. v. UNIVERSAL GLASS LTD. [KAPADIA, J.] 737

namely, Dabur, Hamdard, Maaza, Kissan etc. JIL are in the business of A
manufacturing liquor and food products.

By show-cause notice dated 30.12.1994, differential duty of Rs. 4.33.
crores (approximately) for the period December 1989 till March 1994 was
demanded mainly on the ground that the assessee had, with the intention to
evade duty, wilfully and deliberately filed incorrect price declarations during B
the aforestated period; that a deliberate attempt was made to show that an
independent market existed in respect of the said bottles by filing price lists.
in part-I and part-II, when in fact there existed no such market; that the sales
under parts I & II were not on principal to pripcipal basis; and that the.
assessee had filed price lists in the case of supplies to JIL for ca~tive C
consumption by relying upon the prices charged by the assessee to others,
namely, Dabur, Hamdard, Maaza, Kissan etc. knowing fully well that there
was a difference between the variety of bottles supplied to JIL and the bottles
supplied to Dabur, Hamdard, Maaza, Kissan etc. in tenns of shape and size.
The assessee was called upon to show-cause, under the aforestated
circumstances, as to why the department should not invoke rule 6(b )(ii) of D
the 1975 Rules and detennine the assessable value afresh on the costing
method, particularly when comparable prices were not available.

By the impugned order dated 27 .3.1997, the Commissioner rejected the
contention of the assessee that the prices of the bottles supplied to JIL for
captive consumption were comparable to the prices of the bottles supplied to E
the said "other buyers" for the following reasons. According to the
Commissioner, Mis Ashoka Sales Agency (for short "Mis ASA") was a buyer
set up by the assessee to create an artificial gate price for jars and jugs of
"Maltova" and "Viva". That, the so called "franchisees" were not independent
buyers, who were put up to create an artifici~I market. In this connection, it p
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, G
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 tenns of
capital investments, shape and size of the bottles etc. That, the assessee hi\d H
738 SUPREME COURT REPORTS [2005] 2 S.C.R.

A sold Maltova and Viva jars to Mis ASA and placed reliance on price lists in
part-II which the assessee could not have done as the bottles sold to Mis 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 1 t~e
intention to defraud the department by under-invoicing the prices of the
B bottles supplied to JIL. According to the Commissioner, it was not possi_ble
tq determine the nearest ascertainable value of the bottles manufactured by
the assessee under rule 6(b)(i) and, therefore, the department was~ right in
i~vpking rule 6(b)(ii) of the 1975 Rules.

The Commissioner found that the buyers namely, Dabur, Hamdard,
C Maaza, Kis~an etc. were independent buyer~ and, therefore, the prices reali~d
under such sales could form the basis of ascertainable value and, therefore,
for this category, the Commissioner held that the rule 6(b)(ii)' was not
invokable.

Accordingly, applying rule 6(b)(ii), the duty demanded under the show~
D cause notice stood reduced and confined to sales by the assessee to JIL, their
franchisees and to Mis ASA, amounting to Rs. 1,00,33,321.73 by applying
rule 6(b)(ii).

Aj?;grieved by the ,decision of the Commissioner, the matter was ~arried
in appeal to the Customs, Excise and Gold (Control) Appellate Tribunal,
E New Delhi (hereinafter referred to as "the tribunal").

By impugned decision dated 13 .8 .1999, the tribunal held that since
comparable goods were available, the department was not entitled to invoke
rule 6(b )(ii). According to the tribunal, there could riot have been the intention
F to evade duty on the part of the assessee as the assessee was entitled to
exemption vi de notification no. 217186 and as the goods were tri.odvatable.
Consequently, the assessee's appeal was allowed by the tribunal. Hence, this
civil appeal. ·

Mr. K. Swamy, learned counsel appearing on behalf of the department,
G made the following submissions. According to the learned counsel, no sales
were made against the prices declared in part-L That, the prices declared by
the assessee in part Vl(a) could not be compared with the prices mentioned
in part-I. That, part VI (a) prices were not comparable with part-II prices
under contracts with the franchisees of JIL as these prices were not genuine.
That, the tribunal had failed to appreciate that although the agreements entered
H
C.C.E. v. UNIVERSAL GLASS LTD. [KAPADIA, J.] 739

into were between JIL and their franchisees and though the bottles were A
physically dispatched to the franchisees, the packing costs were borne by JIL.
Hence, the prices of the bottles directly supplied to JIL could not be compared
with the prices of the bottles supplied to the franchisees. Learned counsel
further 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 B
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 th~
basis for assessment of the bottles supplied to JIL. Learned counsel furthet
submitted that the bottles covered by sales to JIL, Mis ASA and franchisee
holders could not be compared with the sales to "other buyers" like Dabur, C
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 forme~
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. D
Shri R. Parthasarthy, learned advocate for the assessee submitted that
there were four categories of buyers, namely, JIL, their franchisees, Mis ASA
and "other buyers" like Dabur, Hamdard, Maaza, i(issan etc.; that 50% of the
total production was supplied to JIL; that in respect of bottles supplied to JIL, E
the assessee was right in filing the price list under part Vl(a) by comparing
the prices with the price lists in respect of sales made by the assessee in
favour of independent buyers like Ganganagar Sugar Mills Ltd., HPSIDC ~s
well as Dabur, Hamdard, Maaza, Kissan etc.; that the prices charged and the
comparable prices listed in part VI(a) represented the correct value of the
bottles and, therefore, the valuation in respect of bottles supplied to JIL for F
captive consumption was correctly done under rule 6(b)(i). According to the
learned counsel, the department was wrong in coming to the conclusion that
the franchisee agreements were. dictated; that the terms and conditions of the
agreements were not unusual but they were normal in the trade; that the
franchisees were independent buyers and the prices charged to them were
similar to prices charged to the other independent buyers; that the franchisee G
agreements between the JIL and the franchisees were in respect of liquor ahd
not for bottles; that M/s ASA was an independent dealer and, therefore, the
prices charged for jugs and jars to JIL were comparable with the prices
charged from M/s ASA; that JIL had bought jars and jugs from other
manufacturers also and, therefore, the prices charged from M/s ASA were H
740 SUPREME COURT REPORTS (2005] 2 S.C.R.

· A comparable with the prices charged by the assessee from JIL in respect of
such jars and jugs; that Mis ASA was not a small trader; that the duty paid
on such jars and jugs was modvatable and, therefore, there could not have
been any intention to evade duty; that in any event, the department had failed
to take into account the prices of bottles made by other manufacturers; that
B the prices forjars and jugs to JIL were the same as the prices charged to Ml
s ASA; that the prices of bottles sold to the Dabur, Hamdard, Maaza, Kissan
etc. represented the correct value and, therefore, the comparable sale instances
were available in the present case and consequently, the department had
erred in invoking rule 6(b)(ii).

C The basic controversy in this civil appeal is - whether the price lists of
bottles sold by the assessee to JIL for captive consumption were comparable
with the prices of the bottles sold to "other buyers" namely, Dabur, Hamdard, ·
Maaza, Kissan etc.; and whether the bottles made by the assessee were
comparable with the bottles made by other manufacturers.

D 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 detennination of the value, where the nonnal price was not
E a5certainable 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(l)(a) of the Act.
F Accordingly, the 1975 Rules had to be applied for computing the value of the
bottles manufactured by the assessee and consumed by JIL.

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 of comparable goods and
if that was not possible, then, alone in the alternative, rule 6(b)(ii) had to be
G applied in order to compute the normal price and consequently, all expenses
like selling and organizational expenses, bill discounting expense~ etc. which
formed an integrated part of the sale invoice, in respect of sales on principal
to principal basis, formed the part of the assessable value of such goods.

In the present case, the dispute was regarding the correct price
H declaration. There was no dispute of classification. Therefore, the reliance
C.C.E. v. UNIVERSAL GLASS LTD. [KAPADIA, J.] 741
placed by the tribunal on the exemption notification no. 217 /86-CE as also A
on the product being modvatable was totally ill-founded.

Moreover, the impugned judgment of the tribunal is perfunctory. It has
not given any reason whatsoever for setting aside the detailed order passed
by the Commissioner. There is no discussion on any of the aspects like
difference in the variety of bottles supplied to JIL vis-a-vis bottles supplied B
to other buyers like Dabur, Hamdard, Maaz.a, Kissan etc. There is no discussion
on the nature of franchisee agreements. In passing the tribunal says that the
goods were comparable. There is no discussion with regard to the shape and
size of the bottles supplied to nL. There is no discussion as to how the
bottles supplied to JIL were comparable to the bottles supplied to the "other C
P"" buyers", like Dabur, Hamdard, Maaza, Kissan etc. The tribunal has not even
'
considered the resale of bottles by M/s ASA to JIL. The tribunal has not even
examined the aspect of under invoicing of sale prices. As stated above, there
were instances of sale price charged to JIL being lower than the cost price
which have not been discussed. In. the circumstances, the tribunal had erred
in interfering with the adjudication done by the commissioner. D
Valuation and the prices get revised from time to time even within the
unit. They are the factors which are known only to the management. These
factors cannot be ascertained by site inspection by the department. Comparable
goods under rule 6(b) should be, as far as possible, identical goods. Simply E
because two goods are known by the same name or by the same genre, does
not mean that they are comparable goods. Even if they are assumed to be
comparable, all relevant differences as far as possible should be recognized.
In the present case, even if the capacities 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. F
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 G
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 H
742 SUPREME COURT REPORTS (2005] 2 S.C.R.

A by the assessee. In terms of rule 6(b)(i), such value has to be of comparable
goods manufactured by the other assessee.

In the present case, the department has found that there were no other
manufacturers of similar bottles. Moreover, in the present case, the department
found price manipulation. Prices ·of bottles sold to JIL were lower than the
B prices of bottles sold to other buyers like Dabur, Hamdard, Maaza, Kissan
etc. Further, the department found that the price increase of bottles sold. by "
the assessee to JIL was in the range of 30 to 48% whereas the price increase
of bottles sold by the assessee to other buyers like Dabur, Hamdard, Maaza,
Kissan etc. was in the range of 50 to 92%. Further, even the costing data
C supplied by the assessee to the department indicated that the bottles supplied
to JIL and their franchisees were under-priced as the selling and organizational
expenses and bill discounting expenses were not included in the assessable
value of the goods and, therefore, such prices were not comparable with
prices of the bottles sold to Dabur, Hamdard, Maaza, Kissan etc. The costing
done by the assessee itself indicates the price differential and consequently,
D prices of the bottles sold by the assessee to companies like Dabur, Hamdard,
Maaza, Kissan etc. were not comparable with the prices of the bottles captively
consumed by the JIL. Further, as found by the Commissioner, the price lists
filed by the assessee under part VI(a) were illusory as they were based on
sales which did not exist or which were meager. Further, as found by the
E Commissioner, the price lists under part Vl(a) filed by the assessee during
1991-92 had no comparable price lists. Further, all supplies shown under gate
passes/invoices in favour of Mis ASA were actually destined for JIL. Further,
as found by the Coinmissioner, the franchisee agreements between JIL and
the franchisee holders were not on principal to principal basis, particularly
when the cost of packing was to be borne by JIL. The -commissioner was
F right in holding that the assessee was guilty of creating artificial buyers.
Further, the commissioner found that the bottles sold to "other buyers" like ;
'
Dabur, Hamdard, Maaza, Kissan etc. were different from the bottles supplied ~,_
to JIL; that although the capacity of a few bottles were common, they were
different in terms of shape and size; they were also different in terms of cost
G of production; that there were no other manufacturers of similar bottles in
terms of technology and in terms of capital investment and thus the prices 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.

H Before concluding, we may refer to one of the arguments advanced on

t
C.C.E. v. UNIVERSAL GLASS LTD. [KAPADIA, J.] 743
behalf of the assessee. It was urged that the costing method adopted by the A
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. l 0.1996 which accounts have been brushed aside by the commissioner
stating that they were prepared after the earlier round of litigation and, B
therefore, reliance cannot be placed on such accounts.

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 C
judgment principle based on the cost of production and the profits which the
assessee would have earned. In the circumstances, when the assessee submitted
before the commissioner its profit and loss account on 22.10.1996, due
weightage ought to have been given to such accounts. It was not open to the
Commissioner to do the costing on the profits of JIL, particularly, when the
figures relating to profits of the assessee were available. Only to this extent, D
I

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 E
Central Excise, reported in (1995) 75 ELT 209.

Subject to above, the appellant succeeds, the impugned judgment of the
tribunal dated 13.8.1999 passed in Appeal No. E/1251/97-A is set aside, with
no order as to costs.

K.K.T. Appeal allowed.
F

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