1988 (2) TMI 209 - AT - Central Excise

Summary

Issues Involved:
1. Determination of assessable value of glassware.
2. Bona fide character of ex-factory sale prices.
3. Interpretation of the term "ordinarily" in Section 4(1)(a).
4. Inclusion of packing charges in the assessable value.

Issue-wise Detailed Analysis:

1. Determination of Assessable Value of Glassware:
The primary issue in these appeals and cross objection is the determination of the assessable value of glassware manufactured by the appellants. The appellants sold their products both ex-factory and from various depots. The department observed that ex-depot sale prices were significantly higher than the declared ex-factory prices, leading to the conclusion that the appellants were attempting to gain undue enrichment at the expense of excise revenue. The Assistant Collector held that the ex-depot price, less transport costs, should be the normal price for assessment. However, the Collector (Appeals) ruled that factory sales should be assessed at ex-factory prices and depot sales at depot prices, less transport costs.

2. Bona Fide Character of Ex-Factory Sale Prices:
The lower authorities doubted the bona fide character of the ex-factory sale prices, particularly for varieties sold predominantly from depots. The appellants explained that certain designs and sizes had markets only in specific areas, and the risk of breakages and central sales tax considerations influenced the sales pattern. The Tribunal found that the lower authorities erred by not considering the overall sales pattern and focusing only on one group of sales. The appellants' explanation was deemed credible, and the Tribunal found no mala fide intent in their sales pattern.

3. Interpretation of the Term "Ordinarily" in Section 4(1)(a):
The department argued that the term "ordinarily" in the new Section 4(1)(a) implied majority sales, thus justifying the use of ex-depot prices for assessment. However, the Tribunal clarified that "ordinarily" does not necessarily mean majority sales but rather that the price should not be exceptional. The genuine ex-factory sale price should be considered if it is available and not rigged. The Tribunal held that the appellants' ex-factory prices were genuine and should be used for assessment under Section 4(1)(a).

4. Inclusion of Packing Charges in the Assessable Value:
The impugned show cause notice also raised the issue of packing charges. The appellants accepted before the Assistant Collector that packing charges, when recovered from the customer, should be included in the assessable value. The Tribunal upheld this position, stating that packing charges were includible in the assessable value as the packing used was the primary packing for the delicate glassware.

Conclusion:
The Tribunal dismissed the department's appeals and allowed the appellants' appeals, with the condition that packing charges be included in the assessable value. Consequential relief was to be given to the appellants. The department's cross objection, seeking no additional relief, was dismissed.