Excise valuation of molasses depends on valid legal price fixation, not informal administrative discussions or assumed market value.

For excise valuation of molasses, only a price fixed under valid legal authority can be treated as the normal price under the valuation proviso; informal administrative discussions do not amount to lawful price fixation. The record did not show any statutory fixation of molasses at Rs. 300 per quintal under the relevant control law, and there was no basis to treat that figure as the assessable value. In the absence of valid legal fixation or evidence of receipt above Rs. 200 per quintal, the higher valuation could not be sustained and the demand failed.

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Issues: Whether the assessable value of molasses cleared by the assessee could be taken at Rs. 300 per quintal on the basis of an alleged price fixation under law, or whether the sale price of Rs. 200 per quintal was the correct assessable value.

Analysis: Proviso (ii) to Section 4(1)(a) of the Central Excise Act treats the price fixed under law, or the maximum price so fixed, as the normal price for valuation purposes. The record did not show any lawful fixation of molasses price at Rs. 300 per quintal. Reliance on minutes of a meeting attended by the Chief Minister did not amount to a statutory fixation of price under the East Punjab Molasses (Control) Act, 1948. In the absence of a valid price fixation under law, the authorities had no basis to treat Rs. 300 per quintal as the assessable value, and there was also no finding that the assessee received anything over and above Rs. 200 per quintal.

Conclusion: The demand based on Rs. 300 per quintal could not be sustained and the assessee succeeded on the valuation issue.

Final Conclusion: The orders of the lower authorities were set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: For excise valuation, a price can be treated as the normal price only if it is fixed under a valid legal authority; informal or administrative discussions do not constitute lawful price fixation.

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