Central Excise valuation of molasses follows the actual class-wise market price, not a higher unrelated buyer price.

Assessable value under central excise was required to reflect the price actually prevailing for the relevant class of buyers, where sales were on an arm's length, principal-to-principal basis and no extra-commercial consideration affected the price. Molasses sold for manufacture of industrial alcohol formed a distinct market class, so the higher price charged by another seller to cattle feed manufacturers could not be adopted for valuation. The operative price for assessment was the price fixed and charged for industrial alcohol manufacturers, and the Revenue's attempt to substitute the higher cattle-feed price was rejected.

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Issues: Whether the assessable value of molasses for central excise purposes was required to be determined on the basis of the higher price charged to cattle feed manufacturers, or on the basis of the price fixed and charged for sales to industrial alcohol manufacturers.

Analysis: The price for molasses used in the manufacture of industrial alcohol was fixed by the Tamil Nadu Co-operative Sugar Federation at Rs. 1300 per M.T., and the assessee sold and purchased molasses at that price on an arms length, principal to principal basis. The buyers of industrial alcohol constituted a distinct class, and the mere fact that another class of buyers, namely cattle feed manufacturers, had been charged a higher price by some other seller did not justify adoption of that higher price for assessment. The value under Section 4 had to reflect the price actually prevailing for the relevant class of buyers, where there was no extra-commercial consideration or relationship affecting the price.

Conclusion: The price of Rs. 1300 per M.T. was rightly accepted for assessment, and the Revenue's contention to adopt Rs. 1900 per M.T. was rejected.

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