1999 (9) TMI 877 - AT - Central Excise

Issues Involved:
1. Valuation of writing and printing paper cleared in reels and converted to sheets.
2. Admissibility of higher discount for reels sent to job workers.
3. Determination of assessable value at the factory gate or at the point of sale.
4. Relevance of previous legal precedents and decisions.

Detailed Analysis:

1. Valuation of Writing and Printing Paper Cleared in Reels and Converted to Sheets:
The primary issue revolves around the valuation of writing and printing paper cleared in the form of reels and subsequently converted into sheets by job workers. The appellants, M/s. Century Pulp & Paper, claimed a higher discount of Rs. 900 PMT for reels as opposed to Rs. 500 PMT for sheets. The dispute arose because the reels were sent to job workers for conversion into sheets, which were then sold to customers. The Assistant Commissioner, Central Excise, Rampur, adjudicated that the goods were actually sold in the form of sheets, and thus, the additional discount of Rs. 400 PMT was not admissible. This decision was upheld by the Commissioner Central Excise (Appeals), Ghaziabad.

2. Admissibility of Higher Discount for Reels Sent to Job Workers:
The appellants argued that the discount of Rs. 900 PMT should be admissible even when reels were sent to job workers for conversion into sheets. They contended that the value of reels should be determined based on the factory gate price of reels to independent buyers. However, the adjudicating authority and the Commissioner (Appeals) held that the actual sale was in the form of sheets, and thus, only a discount of Rs. 500 PMT was admissible.

3. Determination of Assessable Value at the Factory Gate or at the Point of Sale:
The core of the dispute was whether the assessable value should be determined at the factory gate (where the goods were cleared as reels) or at the point of sale (where the goods were sold as sheets). The appellants argued that the factory gate price of reels should be the basis for valuation. The departmental representative contended that since the goods were sold as sheets, the factory gate price of sheets should be used for valuation. The Tribunal's majority decision favored the appellants, stating that the goods should be assessed in the condition they were cleared from the factory, i.e., as reels.

4. Relevance of Previous Legal Precedents and Decisions:
Several legal precedents were cited during the proceedings. The Tribunal referred to the Indian Oxygen Limited case, which established that the factory gate price should be the basis for valuation. Additionally, the Tribunal considered the decisions in the cases of Paramount Centrispun Castings Ltd. and Kay Polyplast Limited, which supported the view that goods should be assessed in the condition they were cleared from the factory. The Tribunal concluded that the appeal should be allowed, aligning with these precedents.

Separate Judgments Delivered:
- Member (T): Lajja Ram held that the appeal should be rejected, confirming the order passed by the Commissioner (Appeals). He emphasized that the goods were sold as sheets, and thus, the factory gate price of sheets should be used for valuation.
- Member (J): G.A. Brahma Deva disagreed, arguing that the goods should be assessed in the condition they were cleared from the factory, i.e., as reels. He proposed to set aside the impugned order and allow the appeal.
- Third Member (T): C.N.B. Nair agreed with Member (J), stating that the valuation should be based on the condition in which the goods were removed from the factory. He supported the view that the appeal should be allowed.

Final Decision:
By majority view, the appeal was allowed, and it was concluded that the goods should be assessed based on the factory gate price of reels, not the sale price of sheets.

Conclusion:
The Tribunal's majority decision favored the appellants, establishing that the assessable value should be determined based on the condition in which the goods were cleared from the factory (as reels), rather than the condition in which they were sold (as sheets). This decision aligns with the legal precedents and the language of Section 4 of the Central Excise Act, 1944.

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