ORDER
V.P. Gulati, Member (T)
1. These appeals have been filed against the order of the Collector of Central Excise (Appeals), Madras. Since both the appeals involve issue of valuation, these are disposed by a common order.
2. Brief facts of the case are that the appellants manufacture watches in their own factory and also get the same assembled from other units belong to them or through cooperative societies on job work basis. For the purpose of manufacture of watches, they manufacture various components which include screws falling under T.I.52 and others falling under T.I. 68 CET. The appellants utilise most of the production of the parts for assembly of watches in the various units by way of captive consumption and a small frac-tion thereof, which is stated to be much less than one per cent, sell in the open market’ through their dealers. The appellants filed price lists under Part I, in term of Section 4(1)(a) of Central Excises and Salt Act applicable to the sales made through the dealers in open market conditions and also filed price lists in Part VI in term of Rule 6 of the Valuation Rules framed under Section 4(a) of the said Act in respect of goods captive-ly consumed they declared the assessable value for the same based on cost of the inputs and their profit. The price declared in Part I was much higher than that declared by them based on the cost of raw material etc. as given in Part VI. The Central Excise authorities earlier approved both the price lists and the appellants cleared the goods accordingly based on the prices approved. However, later, a show cause notice was issued demanding differential duty in respect of the goods captively consumed based on the prices ap- proved in Part I for sale through dealers. The lower authorities have held that inasmuch as the price was available in terms of Section 4(1)(a) for sale through dealers, the same should form the basis of the assessment for all the clearances made by the appellants and Part VI price as declared by them was not relevant for the purpose of levy of duty.
3. The learned Consultant for the appellants Shri Mascarenhas, stated that the appellants were utilising most of the parts manufactured by them for captive consumption and percentage of the goods manufactured and used for captive consumption was over 99.8%. He pleaded price declared in Part I for sale through the dealers therefore, could not be adopted for the goods utilised for manufacture of watches captively. He stated as over 99.8% of the goods were captively consumed only Part VI price, prices as declared by them should be adopted. He pleaded that the sale price of the parts to the dealers was deliberately kept high so that the parts could not be misutilised for assembly of the same into watches by the dealers. He could not cite any case law in support of his plea that the price applicable in case of small fraction of the goods sold in the open market and having all the attributes of normal price in term of Section 4(1)(a) could not be adopted for assessment of the goods captively consumed. He also mentioned in terms of Notification 201/79 although the proforma credit in respect of goods falling under T.I. 68 was available, they could not really benefit by this as the duty chargeable on end product, the watches, was very low being one per cent and the duty on the parts was quite high. He stated that even if proforma credit facility was allowed they would not be able to utilise the credit obtained under that notification as credit would be utilised only to the extent of small amount of duty payable on the watches.
4. The learned SDR for the Department stated that it is an admitted position that a small component of goods were sold in the open market and these constituted a minor fraction of the total goods manufactured by the appellants. He stated inasmuch as the normal price in terms of the main Section 4(1)(a) of Central Excises and Salt Act,1944 was available there was no need to resort to the Rule 6 for arriving at assessable value of goods captively consumed. He stated that even when the goods were captively consumed and the normal price under Section 4(1) (a) was not available before having resort to Rule 6, we have to Rule out the applicability to Rules 4 and 5 of the Valuation Rules and only after these are ruled out, Rule 6 could be made applicable. He stated that the goods sold in the open market could be considered as comparable goods, therefore, the value of the goods captively consumed has to be based on that. He stated that the percentage of the goods sold in the open market is not relevant for the purpose so long as it could be shown that the price of the goods sold by the appellants satisfied all the attributes of the normal price as stipulated under Section 4(1)(a) and in case this was so, assessable value in terms of Section 4(1) (a) would alone be relevant for the assessment. He cited the case of Dharamsi Morarji Chemical Co. Ltd. v. Union of India [1980 (6) E.L.T. 454 (Bom.)] and also the case of Bangalore Bottling Co. Pvt. Ltd. v. Union of India [1978 (2) E.L.T. (J 561)]. He also cited the case of Union of India v. Bombay Tyres International Ltd. [1983 (14) E.L.T. 1896 (S.C.)]. He pleaded that there was no warrant in law in resorting to Rule 6 of Valuation Rules as pleaded by the appellants. He stated that it was upto the appellants to seek benefit from the competent authorities in terms of Notification 201/79, and that issue was not before the Tribunal.
5. The point that arises for consideration is as to whether when normal price in terms of Section 4(1)(a) is available, a separate price as pleaded by the appellants for goods captively consumed based on Rule 6 of the Valuation Rules could, in law, be adopted for the purpose of assessment of these goods. We observe that in terms of Section 4(1)(b), which provides for the determination of the normal price under the valuation rules framed thereunder, a resort to the rules can be had only when the normal price of such goods is not ascertainable for the reason that such goods are not sold or for any other reason. It is not the case of the appellants that the said goods as are captively consumed are not sold. The price at which these goods are sold by the appellants satisfy all the parameters of the normal price as are set out under Section 4(1)(a). It is not the case of the appellants that in respect of the goods sold by them, the price does not represent the normal price in terms of the said Section. It is pertinent to note, in this context, that the appellants in their appeal memorandum before the Collector (Appeals) have stated as under :
“It is common knowledge that when a price list has been filed under Part I Tailing under Section 4(1)(a) (Main definition) of the Central Excises and Salt Act,1944, for the watch components falling under Tariff Item 68, there cannot be a Price List falling under Part VI for the same goods. It is in this respect that the Department has committed the initial error of accepting and approving the price list in Part VI, when the price list in Part I for the same goods was filed and accepted.”
They concede that when the normal price under Section 4(1)(a) was available there was no warrant in law to have resorted to Rule 6 of the Valuation Rules for determination of the assessable value. The appellants’ only plea against the adoption of their sale price to the dealers for assessment of goods captively consumed is that the percentage of such of the said goods captively consumed was very low. It is not their plea, however, that this price charged to the dealers is not conforming to the parameters of the normal price in terms of Section 4(1)(a). We observe that under the Central Excise Law, if normal price for the puprpose of assessment of duty under Section 4(1) (a) subject to other provisions of Section 4, is available notwithstanding the percentage of the sale at this price, the same has to be adopted for assessment of all the goods cleared from the factory. The Revenue has cited case law in support of this plea and there is no warrant to hold it otherwise. The appellants may well plead that the utilisation of the goods captively tantamounts to the clearances of the goods for a separate category of user as against the sales made to the dealers and these constitute a separate category. We observe that in terms of Section 4(1)(a) under the first proviso in case the goods are sold, as per the normal practice of the trade, at different price to different buyers (not being related persons) each such price shall subject to the existance of the other circumstances satisfied in Clause (a) of Section 4(1)(a) be deemed to be the normal price of such goods in relation to each such class of buyers. The appellants have placed no material before us that it is the normal practice of the watch trade that sales as made to the dealers constitute a different class of sales as against the clearances made for captive consumption so far as the pricing of goods is concerned. There is also no price before us for the clearances made for captive consumption which can be deemed to be the normal price for such clearances in terms of the said proviso. As it is, when the value is to be arrived at under the Valuation Rules, the purpose of the exercise is to arrive at the value to the nearest as-certainable equivalent to the normal price as under Section 4(1)(a). Normal price even if worked out under Rule 6 of the Valuation Rules cannot be in any way much different from the price charged to dealers. In view of the above, we find no merit in the appellants’ plea and reject the appeals. We are not giving any findings in regard to the eligibility of the appellants to the benefit of Notification 201/79 as the same has not been convassed before us and nor it arises out of the lower authority’s order.