1998 (7) TMI 315 - AT - Central Excise

Summary

Issues:
1. Correctness of duty paid on acetic acid cleared to branches.
2. Adjustment of paid differential duty.
3. Applicability of Notification 120/75 to goods transferred to branch offices.
4. Determination of assessable value under Section 4(1)(a) of the Central Excise Act, 1944.

Issue 1: Correctness of duty paid on acetic acid cleared to branches:
The appellant, engaged in manufacturing Organic Chemicals, cleared acetic acid to branches at Bombay and Ahmedabad. Dispute arose as invoice prices for branch clearances were lower than those for independent wholesale dealers. Show cause notices demanded differential duty based on genuine invoice prices. Despite resistance, demand was confirmed by Assistant Collector. Commissioner (Appeals) upheld part of the demand, considering demands beyond six months as time-barred. Appellant claimed differential duty was paid based on net prices realized by branch offices, but lower authorities did not adjust these amounts. The Tribunal directed verification of any paid differential duty for adjustment if found due.

Issue 2: Adjustment of paid differential duty:
The appellant asserted that before show cause notices, they paid differential duty based on net prices realized by branch offices, which lower authorities did not adjust. The Tribunal directed verification of any such payments for adjustment if found to be due, emphasizing the need for factual verification.

Issue 3: Applicability of Notification 120/75 to goods transferred to branch offices:
The appellant contended that the benefit of Notification 120/75 should apply to goods transferred to branch offices. However, the Tribunal held that the notification only exempts goods cleared from the factory on sale, not on stock transfer to branches. Goods transferred to depots or branches are not governed by the notification but by the general law requiring duty payment on assessable value under Section 4 of the Central Excise Act, 1944.

Issue 4: Determination of assessable value under Section 4(1)(a) of the Central Excise Act, 1944:
Assessable value under Section 4(1)(a) depends on the normal price of goods sold in wholesale trade. The appellant argued that the Assistant Collector erroneously adopted the highest factory gate price for duty calculation, suggesting the lowest or average price should be used. The Tribunal clarified that the scheme of the Act requires determining the price at which goods are ordinarily sold for delivery at the time and place of removal, not the highest or lowest price. The Tribunal upheld the assessable value determined by the Adjudicating Authority, dismissing the appeal on merits but directing the Assistant Collector to verify any differential duty payments for adjustment.

In conclusion, the Tribunal's judgment addressed the correctness of duty paid, adjustment of differential duty, applicability of Notification 120/75, and determination of assessable value, providing detailed analysis and guidance on each issue raised in the appeal.