1. This appeal is directed against the order of the Collector of Central Excise (Appeals), Bombay dated 11th December, 1979. Originally a revision application was filed before the Central Govt. which on transfer has been registered as an appeal.
2. The brief facts relevant for the present appeal are that the appellant company manufactures sulphuric acid. Approximately 31.2% of its total manufactured quantity is used by the appellants for their captive consumption and the balance is sold to outside parties. So far as the sales to the outside parties are concerned, it has been submitted that this in turn is divided into 2 categories. Approximately 23.5% of the sales are to large or bulk buyers (at the relevant time three such buyers were there), who lifted quantities of 2000 to 3000 M.T. at a time. The second category of sale comprising about 44% of the total manufacture was sold in small lots normally ranging from one tonne to 10 tonnes. However, in some very rare cases, such sales extended to even 100 tonnes. The price charged from the bulk buyers was at Rs. 510/- per M. T. while from the small buyers it was at Rs. 575/- per M. T. The Assistant Collector held that for captive consumption, the price should be at Rs. 575/- while the case of the appellants is that it should have been Rs. 510/- per M. T. The short point for consideration is whether we should take the bulk price of Rs. 510/- per M. T. or the small quantity price which was at Rs. 575/- per M.T. for the purpose of captive consumption acid.
3. It has been contended by the learned counsel for the appellants that the department had earlier approved the sale price of Rs. 510/- applicable to bulk buyers for the purpose of assessment of excise duty where the same was used for captive consumption. Later on, however, they issued a show cause notice and ultimately the Appellate Authority upheld the findings of the lower authorities that even for captive consumption the assessable value should be fixed at Rs. 575/- per M. T.which was the ruling price of the appellants for small buyers. Neither the Assistant Collector nor the Collector (Appeals) has given any reasons for taking the figure of Rs. 575/- per M. T. for the purpose of the captive consumption while assessing the value. Only general reference has been made to the provisions of law but no relevant material has been given for the adoption of the price charged from small buyers. Even in his order the Assistant Collector has noted that the captive consumption is 31.2% of the production.
4. We find that both the authorities below have not properly applied their minds nor they had taken the trouble to collect evidence to ascertain the facts. A general kind of observation had been made for taking the figure of Rs. 575/- per M.T. for assessing the value of the product used for captive consumption. The matter for determination was in a narrow compass and sufficient material could be collected for the purpose. Anyway, we have to act on the material what is available on record.
5. We observe that it is a common commercial practice to give preferential treatment in the matter of pricing to buyers who lift larger quantities vis-a-vis buyers who purchase in smaller lots.
Further, it has also to be noted that when the goods are sold to outside parties even in large bulk quantities, some additional expenses have to be incurred which are not required in the case of goods used for captive consumption, for example, handling charges of the goods till they are bought to the factory gate. In view of the above, we find that the lower authorities were not justified in adopting the selling price of Rs. 575/- per M.T. for the sulphuric acid used for captive consumption. The selling price of Rs. 575/- was applicable to buyers of small lots. We consider that in the circumstances of the case it would be more appropriate to adopt the price of Rs. 510/- per M.T. for goods used for captive consumption i.e., treating them at par with goods sold to bulk buyers. It is also relevant in this connection that the sale to bulk buyers formed a substantial percentage of the total, namely, 23.5, as stated by the learned counsel for the appellants. The findings of the Collector (Appeals) cannot be substantiated ; more so, it does not contain any reasons for arriving at the figure of Rs. 575/- and confirming the view of the Assistant Collector. In the result, we allow this appeal and set aside the impugned order of the Collector (Appeals). The consequent relief, which flows from this order be given to the appellants.