Kapadia, J. - (1.) The issue involved in this civil appeal filed by the department under Section 35-L(b) of the Central Excise Act, 1944 is - whether M/s. Universal Glass Ltd. (assessee herein) was right in valuing the bottles manufactured and supplied by them to M/s. Jagatjit Industries Ltd., Kapurthala (for short "JIL") by relying upon the prices charged by the assessee to companies, like Dabur, Hamdard, Maaza, Kissan etc. (hereinafter referred to as the "other buyers") under Rule 6 (b)(i) of the Central Excise (Valuation) Rules, 1975 (hereinafter referred to as "the 1975 Rules").
(2.) The assessee herein is a division of JIL. It is in the business of manufacturing glass bottles and jars at its factory in Meerut. During the relevant period, 50% of its total production was captively consumed by JIL (holding company) and the remaining was sold to industrial consumers, namely, Dabur, Hamdard, Maaza, Kissan etc. JIL are in the business of manufacturing liquor and food products.
(3.) By show-cause notice dated 30-12-1994, differential duty of Rs. 4.33 crores (approximately) for the period December 1989 till March 1994 was demanded mainly on the ground that the assessee had, with the intention to evade duty, wilfully and deliberately filed incorrect price declarations during the aforestated period; that a deliberate attempt was made to show that an independent market existed in respect of the said bottles by filing price lists in part-I and part-II, when in fact there existed no such market; that the sales under parts I and II were not on principal to principal basis; and that the assessee had filed price lists in the case of supplies to JIL for captive consumption by relying upon the prices charged by the assessee to others, namely, Dabur, Hamdard, Maaza, Kissan etc. knowing fully well that there was a difference between the variety of bottles supplied to JIL and the bottles supplied to Dabur, Hamdard, Maaza, Kissan etc. in terms of shape and size. The assessee was called upon to show-cause, under the aforestated circumstances, as to why the department should not invoke rule 6 (b)(ii) of the 1975 Rules and determine the assessable value afresh on the costing method, particularly when comparable prices were not available.;