TaxTMI 
TaxTMI 
1997 (3) TMI 242
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....ed quota at the price of Rs. 32.00 per quintal and allowing the sugar mills to sell the remaining 35% in open market. The respondent used 35% of the molasses captively for manufacture of other products on the strength of gate passes declaring the value under Rule 6(b)(i) of the Central Excise (Valuation) Rules, 1975, adopting the value as Rs. 32.00 per quintal. Notice dated 7-9-1994 was issued to the respondent stating that another producer of molasses had sold free quota molasses at Rs. 245.00 per quintal and respondent should also pay excise duty on the free quota at the same value. Differential duty on this basis was calculated and proposed to be demanded. Respondent resisted the notice contending that according to Rule 6(b)(i) of the Rules, value should be the value at which the respondent has sold the goods and respondent had sold at Rs. 32.00 per quintal. Alternatively, it was contended that the respondent had purchased molasses out of free quota of another manufacturer at Rs. 165.00 per quintal and in the event of the respondent's contention not being accepted, valuation should be at Rs. 165.00 per quintal. Both the lower authorities overruled these contentions. The demand p....
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.... other assessee. There is also no dispute that the goods captively consumed by the respondent and the goods sold by the respondent at the controlled price are comparable goods. Rule 6(b)(i) of the Rules requires that value shall be based on the value of comparable goods produced by the assessee or by any other assessee. The Rule does not state as to which of the two values, if available, should be preferred, whether price of the assessee or of any other assessee. If the value of comparable goods produced by the assessee has no infirmity of any kind, the intendment of the Rule is that such value should be accepted. If the assessee does not produce and sell comparable goods or where the value of such comparable goods has some infirmity and, therefore, cannot be accepted, then the valuation should be based on the value of comparable goods produced by any other assessee. There is evidence in this case to show that other assessees sold molasses of second grade at varying prices, namely, Rs. 150.00 per quintal, Rs. 160.00 per quintal, Rs. 165.00 per quintal and Rs. 245.00 per quintal. The respondent sold 65% of the comparable goods at fixed price as required by law at Rs. 32.00 per quint....
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....ds are sold by the assessee at the price or the maximum of the controlled price, such price or such maximum price shall be deemed to be the normal price thereof. In the absence of proviso (ii) it may be difficult to regard the fixed price as the normal price or the price at which goods are sold ordinarily by the assessee to a buyer. By virtue of proviso (ii), such fixed price shall be deemed to be the normal price. The deeming is only for the purpose of determining the assessable value under Section 4(1)(a)of the Act in order to determine the quantum of excise duty payable on the goods sold at the fixed price. 8. At page 242 of Principles of Statutory Interpretation by Justice G.P. Singh (Sixth Edition) it is observed as follows :- "In interpreting a provision creating a legal fiction, the Court is to ascertain for what purpose the fiction is created, and after ascertaining this, the Court is to assume all those facts and consequences which are incidental or inevitable corollaries to the giving effect to the fiction. But in so construing the fiction it is not to be extended beyond the purpose for which it is created or beyond the language of the section by which it is cr....
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.... clear that the language used to create the legal fiction itself stands in the way of the deemed normal price being adopted as the basis for valuation of goods not sold at all or sold at price different from the statutorily fixed price. Adoption of consequence of the legal fiction, i.e. the deemed normal price, to value goods not sold or sold at a different price would be impermissible as it would amount to extension of the legal fiction beyond the purpose for which it is created. This inherent limitation of the fictional normal price or value must be read into the scheme of Rule 6(b)(i) of the Rules, as otherwise it would amount to extension of the fictional normal price or value to goods not sold at the statutorily fixed price or maximum price. The deemed normal price or value has this infirmity. It must follow the captively consumed molasses cannot be valued at Rs. 32.00 per quintal under Rule 6(b)(i) of the Rules. 10. Since the deemed normal price or value has such infirmity, the captively consumed goods are required to be valued on the basis of the value of comparable goods produced by any other assessee. That could be the value at which other assessees sell 35% of the....