2001 (3) TMI 685

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....yers at different prices. To some buyers it was sold at Rs. 60/- PMT. Show cause notice, dated 1-11-1996 was issued. The observation was made therein that to two other factories, the assessees had sold molasses at Rs. 250/- PMT. Differential duty of Rs. 2,09,887/- was demanded on the allegation that the correct price was Rs. 250/- PMT. The Assistant Commissioner after hearing the assessees held as follows :- "I have carefully gone through the records of the case. I find that there is nothing to show that the sale of molasses to M/s. Ganesh SSK Ltd. and M/s. WMDC, Chitali during April, 1996 was not the normal commercial transaction. There is nothing on record to establish that M/s. Ganesh SSK Ltd. and WMDC, Chitali are related persons ....

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....le of the molasses by the respondent during the relevant period, ranging from Rs. 50/- to Rs. 250/- per MT, a substantial basis exists for questioning these prices as "normal prices" arrived at arm's length without any extra commercial consideration. In circumstances when a reasonable basis exists for discarding the prices claimed as "normal price" under Section 4(1)(a) of Central Excise Act, recourse to Central Excise Valuation Rules read with Section 4(1)(b) of Central Excise Act is required to be made. I am of the opinion that in the present case, the said Valuation Rules should have been applied in determination of the normal price of the disputed goods. The most appropriate rule for application is Rule 6(b)(i), by considering the pr....

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....ciously low the reasons for the low prices should first be investigated. Molasses is a commodity which is most prone to extreme fluctuations in prices. It is a volatile product. It is difficult to store. Deterioration is a usual phenomenon. The latent heat in the molasses may cause spontaneous combustion. The pollution it causes by leaching is also a constant headache for the producing factory. Apart from, its use as an addition to cattlefeed, it has no other use. Its only industrial use is for alcohol. The capacity of the alcohol manufacturers is limited. In years of record production a factory may be willing to give away the molasses free, but still may not find any buyers. In lean seasons the same molasses may fetch a price of Rs. 2500/-....