1996 (3) TMI 242 - AT - Central Excise

Summary

Issues:
1. Assessment of excise duty on equalized freight and insurance charges.
2. Interpretation of Supreme Court judgments on the inclusion of freight charges in the assessable value.
3. Appropriation of the difference between equalized charges and actual charges by the manufacturer.

Analysis:
1. The case involved the assessment of excise duty on equalized freight and insurance charges collected by a manufacturer of electric supply meters from various State Electricity Boards. The Boards agreed to pay equalized charges irrespective of the actual destination-based costs incurred by the manufacturer. The proper officer modified the price lists to include the difference between equalized charges and actual costs in the assessable value, leading to the manufacturer filing appeals against such orders before the Collector (Appeals).

2. The appellant contended that the Supreme Court had accepted the concept of equalized freight and argued that any fortuitous difference between equalized charges and actual charges should not be added to the assessable value. The appellant referred to Supreme Court judgments, including the Bombay Tyre International Ltd. case and the MRF Ltd. case, which emphasized deducting averaged freight to determine the real wholesale cash price at the factory gate for excise duty calculation purposes.

3. The Revenue consistently maintained that the difference between equalized charges and actual costs should form part of the assessable value. The manufacturer collected charges on an equalized basis, resulting in the total charges exceeding the actual costs incurred. The Tribunal noted that if the difference between equalized and actual charges was appropriated by the manufacturer and not refunded to the Electricity Boards, it would legitimately become part of the price of the goods and, therefore, part of the assessable value. As the manufacturer did not refund the difference but appropriated it, the appeals were dismissed, finding no grounds for interference.