JUDGMENT

B. P. JEEVAN REDDY, J.:- The appeal is preferred against the judgment of the Customs, Excise and Gold (Control) Appellate Tribunal allowing an appeal filed by the Collector of Central Excise against the decision of the Collector (Appeals).

2. The appellant, M/s. United Glass, Bangalore, is not a separate legal entity. It is a manufacturing unit within the Khoday Group of Industries. Khoday Distilleries Limited (K.D.L.) is said to be the holding company. One of 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 controversy in this appeal relates to the determination of the value of the bottles manufactured by the appellant. The period concerned is July 1, 1979 to June 30, 1983.

4. Two price lists were filed by the appellant, one on October 24, 1979 and the other on September 10, 1981. They were approved provisionally. On scrutiny, the excise authorities found that the value indicated by the appellant was much below the cost of production and that the data furnished in that behalf was vague and incomplete. It was also found that in the early years of production, some bottles were sold by the appellant to others also, besides supplying to the other units in the group. Accordingly, two show cause notices dated February 8, 1984 and June 16, 1984 were issued proposing to re-determine the values of the bottles under Rule 7 of the Central Excise (Valuation) Rules, 1975, i.e., under clause (b) of Section 4(1) of the Act. The show cause notices contained the relevant data in support of the valuation which the authorities proposed to adopt. After hearing the appellant, the Assistant Collector confirmed the values proposed in the show cause notices. The appeal preferred by the appellant was, however, allowed by the Collector (Appeals) who directed the Assistant Collector to adopt the sale price charged by the appellant to others as the basis and to finalise the value under Section 4(1)(a) of the Act. Against the decision of the Collector (Appeals), the Collector of Central Excise went in appeal to the Tribunal, which allowed the appeal on the following findings :

(a) That the price declared by the appellant was far below the 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.

(b) The sales of bottles to others was only of inferior quality 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).

(c) In view of the refusal/failure of the appellant to produce 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 be done only under Section 4(1)(b). The appropriate rule under which the valuation has to be determined in this case in Rule 6(b)(i) of the Valuation Rules.

5. The appeal was accordingly allowed with the following directions: "during the material period (1-7-79 to 30-6-83) wherever the prices declared by the respondents were lower than those of M/s. Alembic for the comparable bottles, the prices as approved for M/s. Alembic should be adopted as the basis of assessment for the glass bottles manufactured by the respondents and suppl