Declared sale price for excise valuation stands where independent buyers purchase under controlled conditions without extra-commercial consideration.

Where molasses were sold to independent buyers under State-controlled conditions at a declared price, that price could not be rejected for excise valuation merely because comparable goods allegedly fetched a higher market price. The sale invoices described the goods as second grade, the reduced price had been intimated to the State Excise Commissioner, and there was no evidence of extra-commercial consideration or that the sales were not genuine. In the absence of proof that the declared price was not the sole consideration or that the goods were first quality, the department could not substitute a higher comparable price. The penalty founded on that valuation also could not survive.

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Issues: Whether the declared sale price of molasses sold to independent buyers under controlled conditions could be rejected and a higher comparable market price adopted for central excise valuation, and whether the penalty imposed could be sustained.

Analysis: The sale of molasses during the relevant period was under State control, the reduced sale price had been intimated to the State Excise Commissioner, and the invoices described the goods as second grade. There was no allegation or evidence that the sales were not to independent buyers or that the price was influenced by any consideration other than the sale price itself. In the absence of proof that the goods were first quality or that the declared price was not the sole consideration, the comparable price adopted by the department could not replace the actual sale price. Once the valuation basis failed, the penalty founded on that demand also could not stand.

Conclusion: The declared sale price was correctly accepted for valuation, the demand based on the higher comparable price was unsustainable, and the penalty could not survive.

Final Conclusion: The order confirming the duty demand and penalty was set aside and the assessee succeeded in appeal.

Ratio Decidendi: Where excisable goods are sold to independent buyers at a declared price and there is no evidence of any extra-commercial consideration, the actual sale price cannot be rejected merely because other manufacturers sold similar goods at a higher price.

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