1995 (11) TMI 166 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility for concessional rate of duty under Notification No. 231/85.
2. Inclusion of exempted goods in the aggregate value of clearances.
3. Deduction of sales tax from the assessable value.
4. Alleged suppression of correct value.

Analysis of Judgment:

1. Eligibility for Concessional Rate of Duty under Notification No. 231/85:
The appellants argued that they were entitled to a concessional rate of duty under Notification No. 231/85, dated 11-11-1985. They contended that the value of clearances of exempted goods, specifically tubes and flaps for animal-driven vehicles, should not be included in the aggregate value of clearances for the financial year 1985-86. They cited the Supreme Court judgment in Lal Chand v. Radha Krishna, asserting that the expression "value of clearances" should be consistently interpreted to exclude exempted goods. However, the Tribunal found that the Notification No. 231/85 did not explicitly exclude the value of exempted goods from the aggregate value of clearances. The Tribunal held that the aggregate value of clearances, including exempted goods, exceeded Rs. 2 crores, thus disqualifying the appellants from the concessional rate of duty.

2. Inclusion of Exempted Goods in the Aggregate Value of Clearances:
The appellants contended that the value of exempted goods should not be included in the aggregate value of clearances. They argued that the clearances of tubes and flaps for animal-driven vehicles, amounting to Rs. 10,21,552.50, should be excluded. The Tribunal, however, noted that there was no provision in Notification No. 231/85 to exclude the value of exempted goods. The Tribunal referenced the case of U.P. Laminations, which held that goods, even if wholly and unconditionally exempted, remain excisable and their value must be included in the aggregate value of clearances. Consequently, the Tribunal concluded that the value of exempted goods should be included in the aggregate value of clearances.

3. Deduction of Sales Tax from the Assessable Value:
The appellants argued that sales tax should be deducted from the invoice price to determine the assessable value under Section 4(4)(d)(ii) of the Central Excises and Salt Act, 1944. They claimed that under the Incentive Scheme by the State Government, sales tax was "payable" and should be deducted even if not actually paid. The Tribunal referred to the Supreme Court judgment in Union of India v. Bombay Tyre International, which stated that taxes should be deducted from the sale price only if they are proved to have been paid. Since the appellants did not pay the sales tax, the Tribunal held that no rebate on account of sales tax could be allowed, and the sales tax could not be deducted from the invoice price.

4. Alleged Suppression of Correct Value:
The Department alleged that the appellants showed different values in the gate passes (GP-1) and invoices, suggesting suppression of the correct value. The appellants contended that the gate pass value correctly reflected the assessable value, while the invoice value included excise duty and sales tax. The Tribunal found that the value for determining the aggregate value of clearances should be based on the invoice price, as it represents the actual transaction value. The Tribunal upheld the Department's view that the aggregate value of clearances should be calculated based on the invoice price, including excise duty and sales tax.

Conclusion:
The Tribunal upheld the order of the Collector (Appeals), concluding that the appellants were not eligible for the concessional rate of duty under Notification No. 231/85 as the aggregate value of clearances, including exempted goods and sales tax, exceeded Rs. 2 crores. The appeal was accordingly rejected.