The Collector of Central Excise, Hyderabad, after numbericing the difference in the price charged on the batteries supplied to MOD and HAL issued a show cause numberice demanding differential duty on batteries supplied by appellants to MOD, on the ground that the market value of silver should be taken as the basis for determining the assessable value.
As per terms of the companytract, the appellants were to give a rebate to the MOD in the price to be charged per battery and this was the reason for the difference in prices between the batteries supplied to MOD and HAL.
The appellants are the manufacturers of silver oxide zinc batteries hereinafter referred to as batteries supplied to Ministry of Defence hereinafter referred to as MOD and Hindustan Aeronautics Limited hereinafter referred to as HAL .
Hence, they supplied the old life expired batteries to various manufacturers to recover the silver from those batteries and use the recovered silver in the manufacturing of the fresh batteries and the appellants were to give a rebate to the MOD in the price to be charged per battery.
The appellants while invoicing the goods to the MOD, took the value of the silver used in those batteries as was recovered from the life expired batteries at the rate of Rs.2,500/ per kg.
This will number make the value of silver undeterminable.
On appeal, the Appellate Tribunal held that the price determined by the appellants for the batteries by adapting the lower silver price at the rate of Rs.2,500/ per kg.
The value of the silver supplied to the appellants is determinable.
The issue in this appeal relates to the excise duty in respect of the batteries supplied to the MOD.
Silver is one of the raw materials used in the manufacture of the batteries.
It was held that price based on companyparable goods was to be adapted as the price of the silver i.e. at the rate of Rs.6,666/ per kg.
The sale of batteries to MOD was held to be a special arrangement and a numberional price of silver was adapted.
MOD was holding the stock of silver in Bombay and Calcutta Mints and supplied the same to various manufacturers of batteries from whom it was purchasing the batteries.
The appellants supplied the batteries to HAL at a higher price than the price charge to MOD.
As per the terms of the companytract, MOD was to supply the silver to manufacture the batteries.
Since the stock depleted, MOD supplied old life expired batteries for the recovery of silver.
MOD used to obtain silver at Rs.2,500/ per Kg.
as against the open market price of Rs.6,666/ was a numberional workout and the price indicated by the MOD is number reflective of the true value of the silver.
The prices charged were in terms of the companytract entered into by the appellants with the respective buyers.
Since the stock of silver in the mint depleted, MOD supplied the old life expired batteries to retrieve the silver and to use the recovered silver in the manufacture of new batteries.
was that the MOD was allowed to purchase the silver from the mint at the rate of Rs.2,500/ per kg.
The price charged to MOD was Rs.33,393/ and to HAL was Rs.53,993/ .
and according to the companytract, the stipulation was that the price of the silver to be adapted for arriving at the price to be charged was to be Rs.2,500/ per kg.
After sometime, MODs stock of silver at Bombay and Calcutta Mints got depleted.
The value of the silver supplied would be Rs.
In the case of supplies to MOD, there was a stipulation in the companytract that the appellants would be supplied with the silver.
Hence this appeal.
2500/ per kg.,
RAJENDRA BABU, CJI.
Inspite of demur the said demand was companyfirmed.
the price at which MOD would get the silver from the mint.
The price charged by the appellants was in terms of the companytract entered into by them with MOD.
Had the stock of silver in the mint did number deplete, MOD would have supplied silver from the mint.
which is the rate at which MOD used to get the silver from the mint.
as against Rs.6,666/ per kg.
from the Mints.
as was adapted in case of supply of batteries to HAL and dismissed the appeal.
