1991 (6) TMI 151 - AT - Central Excise

Summary

Issues:
Assessable value determination for scooters sold through depots based on ex-factory price.

Analysis:
The case involved a dispute regarding the assessable value of scooters sold through depots. The appellants, who manufactured scooters, claimed the assessable value based on the ex-factory price. They argued that the price at which goods are sold at the factory gate should be the basis for determining the assessable value, as per Section 4 of the Central Excises & Salt Act, 1944. The Collector, however, proposed to determine the assessable value by adding various expenses incurred by the company on depot sales. The main contention of the appellants was that the assessable value for depot sales should be based on the ex-factory price, citing a Supreme Court judgment in Indian Oxygen Ltd. v. C.C.E. [1988 (36) E.L.T. 723 (S.C)].

The Tribunal analyzed Section 4 of the Act, which states that the assessable value shall be deemed to be the normal price at which goods are ordinarily sold by the assessee in wholesale trade at the time and place of removal. It was established that the price at the factory gate is crucial for determining the assessable value. Referring to the Supreme Court judgment, it was clarified that when goods are sold both at the factory gate and through depots, the factory gate price should be the basis for assessable value, even for depot sales. The Court emphasized that transportation charges should not be added to the wholesale price at the factory gate for excise duty purposes.

Regarding the Collector's decision to include all expenses incurred by the manufacturer in maintaining depots for determining the assessable value, the Tribunal disagreed. It explained that expenses beyond the factory gate, like depot maintenance costs, should be excluded from the assessable value. The Collector's reasoning was found to be contrary to Section 4 of the Act and the Supreme Court's decision. The Tribunal also noted that there was no doubt about the genuineness of the ex-factory price, making a remand unnecessary.

In conclusion, the Tribunal allowed the appeal, setting aside the Collector's order. It ruled that the assessable value for scooters sold through depots should be based on the ex-factory price, in line with Section 4 of the Act and the Supreme Court's interpretation. The decision highlighted the importance of the factory gate price in determining the assessable value for excise duty, emphasizing the exclusion of post-factory gate expenses from the valuation process.