Customs, Excise and Gold Tribunal - Delhi
Kisan Sahkari Chini Mills Ltd. vs Commr. Of C. Ex. on 11 October, 2006
ORDER C.N.B. Nair, Member (T)
1. Heard both sides and perused the record.
2. The only issue arising for consideration in these appeals is the valuation of molasses sold by the appellant sugar mills. Therefore, all the appeals were taken for consideration together and remain disposed of under this common order.
3. The dispute has arisen in these circumstances. The appellant cooperative sugar mills are all members of a federation of co-operatives. The federation fixed the sale price for molasses at Rs. 135 per qtl. in respect of sale to certain other members of the federation. This price was much lower than the price at which molasses was being sold to non-members of the federation. For that reason, the Revenue authorities rejected the sale price fixed by the federation and ordered assessment at the sale price to non-members. The ground taken in the order is that buyer and seller are related parties.
4. The contention of the ld. Counsel for the appellants is that the members of a federation of co-operatives cannot be treated as related persons and this position remains settled by the judgment of order of the Supreme Court in the case of Union of India v. Kaira Distt. Co-op. Milk Producers Union Ltd. . The ld. Counsel has also relied on the decision of this Tribunal in the case of Morinda Co-op. Sugar Mills v. CCE 2001 (45) RLT 613 support of his contention that transaction value is to be accepted even when the sale is between members of a federation co-operatives.
5. We find that the substance of the dispute is not on whether the assessee and the buyers were related persons. The true dispute is whether the safe price to the nominated members of the federation were commercial prices. On that there could be no dispute. A letter dated 2-9-94 of the federation to its members makes the position clear. We may read the relevant portion of that order:
Thus there is a relationship between the buyer and seller. Further the price is not the sole consideration for the sale. Because the apex Co-op. Society, the Federation is a federal authority also for its constituent Co-op. Sugar Factories and thus the directions as issued by the Federation in this behalf on 20-3-94, have a binding officacy on its constituent units and as such the free sale Molasses will be sold to the sister concern @ Rs. 135 per qtl till further orders. The calculation of Central Excise is to be done @ 20% of the price of the Molasses sold w.e.f. 1-3-94.
6. It is clear from the above portion of the letter that "price is not the sole consideration for the sale" and that relationship between the buyer and seller (whatever that be) has affected, the price. It is well settled that only a commercial price qualifies the test of being a normal sale price. Since it is clear from the letter of the Federation that price is not the sole consideration, that price cannot be treated as a normal sale price and used for the purpose of assessment to Central Excise duty. The Revenue authorities were, therefore, right in rejecting the sale price fixed by the federation. They cannot also be faulted for adopting the sale price to non-members, since that price was a commercial price. No evidence is available to suggest that price to non-members was an inflated price or that it was not a normal commercial price.
7. In the facts of the present case, the judgments relied upon by the ld. Counsel for the appellant are not attracted inasmuch as it is not the membership of the federation which disqualified the sale price for the purpose of assessment, but the fact of it being not a commercial price. In the Morinda Co-op. Sugar case, this Tribunal held in favour of the assessee upon a specific noting that sale price was a commercial price.
8. In view of what is stated above, we agree with the contention of the ld. SDR that the rejection of the sale price was correct and demand of duty based on the sale price to non-members is sustainable. In the result, the appeals fall and are rejected in regard to the duty demands.
9. The appellants have also submitted that demand of interest for the period prior to 26-5-95 is not sustainable inasmuch as statutory provision in relation to interest was brought into for only from that date. This contention is required to be accepted. Therefore, it is made clear that the assessee will be liable to pay interest only for the period subsequent to the enactment of the Section.
(Dictated & pronounced in open Court on 11-10-2006)