1. The appellant was engaged in the manufacture of polyester filament yarn. Between 16th March, 1995 and 16th June, 1995, the duty on this product was leviable on a tariff value determined under Section 3(2) of the Act, Rs. 98/- per kg. The notification fixing a tariff value was withdrawn with effect from 16th June, 1995. The appellant thereafter cleared the goods at the prices determined by it.
2. Six notices issued to it alleged short payment of duty on the clearances of yarn that it made between June, 1996 and August 1997, on the ground that clearances were made at prices lesser than Rs. 98/- and lower than the tariff value which was fixed. Adjudicating upon the notices, the Deputy Commissioner, whose order has been confirmed by the Commissioner (Appeals), has confirmed the demand for duty and imposed penalty. Hence these appeals.
3. The contention of the Counsel for the appellant is that, in the absence of any tariff value, it was open to it to sell the goods at any price. There being no allegation that the value which it paid and adopted for payment of duty was not in consonance with the provisions of Section 4 of the Act, the mere fact that the value was lower than the tariff value that was earlier fixed is entirely insufficient on which the demand for duty was based. The departmental representative relies upon the finding of the Commissioner (Appeals) that the appellant had not filed price declaration, or furnished the pattern of sale.
4. We fail to see how this impinges on the issue of value. In point of fact, Rule 173C as it stood at the relevant time did not require a formal declaration of price to be filed by a manufacturer to the departmental authorities before clearance of the goods, except in the special circumstances specified in the second proviso under Sub-rule (1). It is not the department's case that any of these circumstances, which would require filing of declaration of price, was present. Nor does the department contend that the appellant did not declare the value under Section 4 of the Act of the goods on such documents as sales invoices that it issued for sale of the goods. Even assuming such a failure on the part of the appellant, that alone is insufficient on which to base a conclusion of undervaluation. Such a lapse may entail the assessee to penalty for contravention of the rule. However for short levy to be successfully established, it has to be shown that the value on which the appellant paid duty was not in accordance with the provisions of Section 4. The Commissioner does say that the appellant had earlier cleared the goods at a slightly higher price of Rs. 103/- and Rs. 104/- in 1995. This does not mean that the appellant could not sell its goods at a lower price later. The price of every commodity fluctuates depending upon the operation of market forces and it would be flying in the face of reality to apply blindly an earlier price as the standard or a reference for assessment. It is quite possible that the appellant had, prior to 1995, sold the goods at a price far lower than the price at which it sold the goods under consideration. That by itself could not entitle it to apply this price for clearances in future.
5. It would not be incorrect to say that tariff values are fixed in the case of goods which are subject to frequent fluctuation in price in order to reduce difficulties in assessment and collection of tax. While a tariff value may have some relevance to the prevailing price of goods, it does not establish the benchmark for assessment for all times to come. The tariff value that was notified in March, 1995 of Rs. 98/- was done away in June, 1995. It obviously cannot have any relevance to the market situation a year later. The department does not allege that the price at which the appellant cleared the goods was not the one and lower price. There is therefore no case made out by the department.