Judgment

Kapadia, J.—The issue involved in this civil appeal filed by the department under section 35L(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