1999 (3) TMI 100 - AT - Central Excise

Summary

Issues Involved:

1. Whether the amount of duty subsequently demanded can be abated from the sale price.
2. Treatment of sale price as cum-duty price.
3. Interpretation of Section 4(4)(d)(ii) of the Central Excise Act.
4. Applicability of precedent judgments.

Summary:

Issue 1: Whether the amount of duty subsequently demanded can be abated from the sale price.

The Tribunal examined whether the duty subsequently demanded can be abated from the sale price of goods. The appellants contended that the excess realization in sale prices included the element of duty and should be abated from the sale price, as per Section 4(4)(d)(ii). The Revenue argued that since no duty or lower duty was initially charged, the sale price did not include the higher duty, and only the actual duty included in the sale price should be deducted. The Tribunal concluded that the total duty proposed to be demanded should be abated from the cum-duty price actually received, as per Section 4(4)(d)(ii), rejecting the hypothetical consideration of what the price might have been if the correct duty had been paid initially.

Issue 2: Treatment of sale price as cum-duty price.

The Tribunal discussed whether the total price realization should be treated as cum-duty price. The Revenue's stance was that no deduction should be made if no duty was initially paid or only the actual duty initially charged should be deducted. The appellants argued that the price realization including duty made by them should be treated as cum-duty price, and the department should abate the duty element from the sale price. The Tribunal agreed with the appellants, stating that the initial price realization should be treated as cum-duty price for the duty proposed to be charged subsequently.

Issue 3: Interpretation of Section 4(4)(d)(ii) of the Central Excise Act.

The Tribunal analyzed Section 4(4)(d)(ii), which states that the value of excisable goods does not include the amount of duty of excise, sales tax, and other taxes payable on such goods. The Tribunal held that the wholesale price includes the element of duty payable on the goods and any further demand of duty should be abated from the cum-duty price actually received. The Tribunal emphasized that the facts as they are should be considered, not hypothetical scenarios.

Issue 4: Applicability of precedent judgments.

The Tribunal reviewed various judgments, including the Apex Court's judgment in Bata India, which was found to be inapplicable as it dealt with an exemption notification context. The Tribunal relied on the judgment in Pravara Pulp & Paper Mills, which supported the deduction of subsequent effective duty from the initially realized price. The Tribunal also referred to other judgments that supported the appellants' contention and rejected the reasoning in Auto Industries.

Separate Judgment by Lajja Ram, Member (T):

Lajja Ram, Member (T), delivered a separate judgment, disagreeing with the majority view. He opined that the extra money collected should be treated as additional money consideration and included in the assessable value. He relied on the Supreme Court's decision in Bata India, which held that no deduction of duty is permissible unless it is shown that the price includes an element of excise duty. He concluded that the amount of duty demanded could not be abated from the sale price.