Customs, Excise and Gold Tribunal - Mumbai
C.C.E. & Cus., Aurangabad vs Nasik Sahakari Sakhar Karkhana Ltd. on 15 February, 2002
Equivalent citations: 2002ECR262(TRI.-MUMBAI), 2002(142)ELT206(TRI-MUMBAI)
ORDER Gowri Shankar, Member (T)
1. Nasik Sahakari Sakhar Karkhana Ltd., the respondent to this appeal, is a sugar mill. It cleared the molasses that arises as a by-product in the manufacture of sugar to various buyers at different value. It is stated that the goods were sold after inviting tenders from intending buyers. Notice issued to the manufacturer proposed to enhance the value of the molasses to Rs. 1000/- per ton on the ground that this should be the cost of manufacture of molasses, as certified by the Chief Sugar Technologist of the Vasant Dada Sugar Institute, Pune. Adjudicating upon this notice, the Assistant Commissioner accepted the proposal in the notice, enhanced the value ordering duty to be paid in accordance with the value. The assessee appealed this order. The Commissioner (Appeals) observed that the sale price of the molasses is based upon the actual realisation of the buyer and there is no allegation that any amount in addition has been paid by the buyer to the manufacturer. This being the case, there was no reason not to accept this value. He noted that in any event, the manufacturing cost of molasses would not apply to the goods that were sold, since the sale price was available. He therefore allowed the appeal. Hence this appeal by the Commissioner.
2. The appeal only relies upon the statement of the Chief Sugar Technologist of the Vasant Dada Sugar Institute, Pune. It is clear that determination of the value of goods sold by a manufacturer is to be done in accordance with the provisions of Clause (a) of Sub-section (1) of Section 4. Only if this cannot be done, recourse to the Valuation Rules, which provided in Rule 6(b)(ii) for basic value on the cost of manufacturer, can be justified. There is not a slightest allegation in the notice, or the finding by the Commissioner (Appeals) that the value, that was declared by the manufacturer, was false or suppressed elements of the price that was actually paid. Therefore, the action of the Assistant Commissioner in effectively applying Rule 6(b)(ii) should not be accepted. It is also to be noted that it is well known that the molasses is a commodity subject to deterioration.
3. Apart from this, we do not see how the opinion of the Chief Sugar Technologist can be relied upon to determine the price of molasses at a particular level. Molasses, as we have noted, is an accidental by-product arising in the course of manufacture of sugar. Sugar cannot be manufactured without molasses arising in the course of such manufacture. It is in fact a residue of the manufacturing process. Nobody does set out to manufacture molasses. In that situation, it will not be possible to determine the cost of manufacture. What the technologist gives in his letter is to determine the cost of manufacture of sugar and by apportioning the cost of this manufacture to the molasses in proportionate to the quantity of molasses that arises in the manufacture of a quantity of sugar. This should perhaps roughly similar to determining the cost of manufacture of tailor cutting by starting the cost of the cloth that is given to the tailor and apportioning the tailors charges of cutting that arises. This is an unsound method which does not follow any accounting principle. The value of this letter as an indicator of the cost of process is not at all acceptable.
4. We therefore decline to interfere and dismiss the appeal.