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1995 (1) TMI 69

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....f the companies held by K.D.L. was Khoday Brewing and Distilling Industries Private Limited (K.D.B.I.) of which the appellant is a division. There is a partnership firm, Khoday, RCA. The partners of the said firm are all members of the Khoday family which controls the K.D.L. and K.D.B.I. The main business of this group of industries is manufacturing and bottling of beer and other alcoholic liquors. 3.Until 1978, the bottles required by the said group of industries for bottling beer and other alcoholic liquors were purchased from M/s. Alembic Glass Industries which has a plant near Bangalore. In the year 1978, however, the said group of industries established their own unit for manufacturing the bottles, the appellant herein. The controvers....

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....ribunal, which allowed the appeal on the following findings : That the price declared by the appellant was far below the(a) cost price and is totally unacceptable. The price declared was only a fraction of the price charged by M/s. Alembic Glass Industries for similar glass bottles. The sale of bottles to others was only of inferior quality(b) and 'reject' bottles. The sale was to dealers in second-hand bottles (kabariwalas) and, therefore, that price cannot be adopted as the basis for valuation under Section 4(1)(a). In view of the refusal/failure of the appellant to produce(c) the relevant data and material called for by the authorities, it must be held that the value in this case cannot be determined under Section 4(1)(a). It has to b....

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.... of Alembic should be adopted but where the prices of Alembic were lower than the prices declared by the appellant, the appellant's prices should be adopted. The learned counsel submitted that the course adopted by the Tribunal is inequitable besides being illegal. Sri Joseph Vellapally, learned counsel for the Revenue, on the other hand, justified the approach of the Tribunal as wholly consistent with the Rules and submitted further that where the appellant itself has declared higher values, it cannot object if those values are accepted. 7.Sub-section (1) of Section 4, which is relevant for our purposes, reads thus : "S. 4.Valuation of excisable goods for purposes of charging of duty of excise. Where under this Act, the duty of excise—....

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....ice of the goods sold by the assessee to or through such related person shall be deemed to be the price at which they are ordinarily sold by the related person in the course of wholesale trade at the time of removal, to dealers (not being related persons) or where such goods are not sold to such dealers, to dealers (being related persons) who sell such goods in retail; where the normal price of such goods is not ascertainable for(b) the reason, that such goods are not sold or for any other reason, the nearest ascertainable equivalent thereof determined in such manner as may be prescribed." 8.Under Section 37 of the Act, the Central Government has framed the Central Excise (Valuation) Rules, 1975 which govern the valuation of excisable goo....

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....ssee would have normally earned on the sale of such goods; where the assessee so arranges that the excisable goods are(c) generally not sold by him in the course of wholesale trade except to or through a related person and the value cannot be determined under clause (iii) of the proviso to clause (a) of sub-section (1) of section 4 of the Act, value of the goods so sold shall be determined — in a case where the assessee sells the goods to a related(i) person who sells such goods in retail, in the manner specified in clause (a) of this rule; (ii) in a case where a related person does not sell the goods but uses or consumes such goods in the production or manufacture of other articles, in the manner specified in clause (b) of this rule; ....