2005 (7) TMI 103 - SC - Central Excise

Quantum of abatement/deduction claimed by the assessee on account of equalized freight and on account of ROC Held that - In this case we are not concerned with the admissibility of the claim for deduction on account of ROC and equalized freight. When it comes to the question of quantum the duty is on the assessee claiming deduction to provide requisite data and certificates from Chartered Accountant as well as books of accounts to justify the quantum of deduction. In the present case on the item of deduction for ROC the assessee has not produced the requisite data indicating the basis on which ROC is computed. There is nothing to indicate as to when ROC became chargeable. There is nothing to indicate the rate at which ROC was chargeable. There is nothing to indicate whether the amount of ROC was at all reflected in the invoices. Similarly on the question of equalized freight we find that the assessee had sold a part of its goods to independent dealers ex-factory and the rest of its goods were sold to its depot/branches. In this connection it may be noted that 25% of the total sales was to independent buyers. In other words the goods were partly sold at the factory gate and partly from the depot. The assessee has not led evidence to justify the extent of the claim for deduction on account of actual freight. The Assistant Commissioner has failed to quantify by actual facts and figures the actual extent of the freight allowable as deduction. Thus we remit the matter to the Assistant Commissioner to decide the quantum of deduction/abatement from the sale price in wholesale trade on account of freight and ROC in accordance with law. The appeal filed by the department stands allowed.

Summary

Issues:
- Abatement claimed on account of freight in the price declaration
- Admissibility of ROC as an abatement from the sale price
- Assessment based on equalized freight
- Burden of proof on the assessee for deduction claims
- Lack of evidence provided by the assessee for deduction justifications

Abatement claimed on account of freight in the price declaration:
The case involved an appeal under Section 35-L(b) of the Central Excise Act, 1944 regarding abatements claimed by an assessee on freight in the price declaration. The assessee, engaged in manufacturing aerated waters, filed price-lists and later a price declaration under Rule 173C of the Central Excise Rules, 1944. The Assistant Commissioner provisionally assessed the price-declaration due to discrepancies in the claimed abatement on freight. However, based on a previous order regarding ROC, the Assistant Commissioner allowed the abatement claimed by the assessee on account of ROC from the sale price.

Admissibility of ROC as an abatement from the sale price:
The department contested the abatement allowed on account of ROC and equalized freight, leading to an appeal to the Commissioner (Appeals) and subsequently to the Tribunal. While the Tribunal upheld the abatement on ROC based on a previous decision, it scrutinized the deduction claimed for actual freight. The Tribunal found discrepancies between the claimed deduction and the actual expenditure per crate, leading to the restoration of the Assistant Commissioner's order.

Assessment based on equalized freight:
The Assistant Commissioner determined the assessable value under Section 4 of the Central Excise Act based on the wholesale price charged by the assessee at the factory gate, considering goods sold to independent dealers and depot/branches at the same price. This assessment method was challenged by the department, leading to a series of appeals and decisions.

Burden of proof on the assessee for deduction claims:
The appellate authorities emphasized that the burden of proof lies on the assessee to justify deduction claims for ROC and equalized freight. The Tribunal highlighted the necessity for the assessee to provide records, data, and certificates to support the extent of deductions claimed. Failure to provide such evidence led to the allowance of the department's appeal by the appellate authority.

Lack of evidence provided by the assessee for deduction justifications:
The Supreme Court clarified that in the present case, the focus was on the quantum of abatement claimed by the assessee rather than the admissibility of the claims. It was noted that the assessee failed to produce adequate data and evidence to justify the deductions claimed for ROC and equalized freight. Consequently, the Court remitted the matter to the Assistant Commissioner to decide the quantum of deduction/abatement in accordance with the law, ultimately allowing the department's appeal with no order as to costs.