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TMI Blog1988 (7) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... issued by the Assistant Collector of Central Excise why certain elements claimed by the appellants as deduction be not included in the assessable value of the goods. 16.8.1979 The Superintendent of Central Excise directed the appellants to follow the provisional assessment procedure prescribed under Rule 9B of the Central Excise Rules, 1944 and to execute the required bond for that purpose. The appellants were also intimated that all their future assessments shall be provisional.The appellants admit that they ignored these directions for some months but ultimately they did execute the required B-13 Bond for provisional assessment. 5.9.1979 The Superintendent issued another Show Cause Notice to the appellants why differential duty be not demanded from the appellants under Rule 10 of the Central Excise Rules, 1944 w.e.f. 20-6-1979 and why penalty be not imposed on them under Rule 173Q. 21.3.1980 The Assistant Collector passed his first order-in-original modifying the price list dated 20.6.1979 and thereby disallowed certain deductions. The appellants thereupon moved the High Court at Patna by way of a Writ Petition.[No. 276 of 1980 (R)]. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal of the appellants. 3. We have heard both sides and have carefully considered their submissions and the record. The main plea of the appellants is that since the department had not filed any appeal against the judgment of the Hon ble Patna High Court, the said judgment became final and the department was bound by it. It was, therefore, wrong for the Assistant Collector to rely on the judgment of the Hon ble Supreme Court in the case of Bombay Tyres International Ltd. and disallow certain deductions on the strength of Supreme Court judgment, pleaded the appellants. The Asstt. Collector was functioning in terms of the remand ordered by the Hon ble High Court and not as the original authority, asserted the appellants. The learned counsel for the appellants cited the decisions in East India Industries Ltd. (1983 Vol. 54 STC 88) and Sitaram Goel (AIR 1972 SC 1412) in this connection. The appellants further pleaded that since this Tribunal was not an authority superior to the Patna High Court, even this Tribunal could not go beyond the mandate given by the Hon ble High Court. We have no difficulty in accepting this argument of the appellants. We respectfully bow before the ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee up to the date of delivery on account of storage charges, outward handling charges, interest on inventories (stock carried by the manufacturer after clearance) charges for other services after delivery to the buyer, namely after sales service and marketing and selling organisation expenses including advertisement expenses cannot be deducted. It will be noted that advertisement expenses marketing and selling organisation expenses and after sales service promote the marketability of the article and enter into its value in the trade." In the light of the Hon ble Supreme Court s judgment, therefore, all elements of cost which enriched the value of the goods and made them marketable, and in that sense fully manufactured, have, up to the stage of the factory gate, to be included in the assessable value and such elements cannot be treated as post-manufacturing expenses. Post-manufacturing expenses, for deduction under Section 4, began only after removal of the goods from the factory gate and not at any earlier stage. There was, in principle, no error committed by the Asstt. Collector if he chose to rely on the judgment of the Hon ble Supreme Court in determining the elements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir back. Even the learned representative of the department agreed that though the Asstt. Collector quantified the differential duty on the basis of figures supplied by the appellants themselves, the calculations did go wrong in certain respects and that, therefore, after deciding the issue of principles, the matter of quantification could be remanded to the Asstt. Collector for re-doing it after due hearing to the appellants. We agree with this submission. 5. The next plea of the appellants was that in any view of the matter, the extended period of limitation of 5 years was not available to the department for demanding duty and the demand could, if at all tenable, go back only six months from 7-3-1983 (the date of second Show Cause Notice of the Asstt. Collector). While we do agree with the appellants that this was not a case of fraud or suppression, we do not agree that any portion of the demand was time-barred. As already stated, the first Show Cause Notice was issued by the Asstt. Collector on 7-7-1979, within a few days of filing of the price list. This Show Cause Notice was not quashed by the Hon ble Patna High Court. Soon thereafter, the authorities directed that the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Asstt. Collector, we have no difficulty in agreeing with their pleadings. The first point made by the appellants was that since they had 26.06% to 40.34% sales at the factory gate, the ex-factory price should govern all assessments and there should be no need for the Asstt. Collector to take their ex-depot prices as the basis for calculation of duty. We agree that if, on verification by the Asstt. Collector, a genuine ex-factory price is found to be ascertainable in the case of the appellants, all clearances, including stock transfers to the appellants depots, should be assessed only at the ex-factory price. If, on verification, a genuine ex-factory price is found not to exist, the assessable value would have to be worked out from the ex-depot sale prices but in that event the appellants ought to be allowed all the deductions held permissible by the Hon ble Supreme Court in their judgment in the case of Bombay Tyres International. Ltd. aforesaid and in their further judgment in the case of MRF Ltd. -1987 (27) E.L.T. 553 (SC). 7. The next deduction pressed for by the appellants was for special/secondary packing charges. They stated that their normal packing for glass sheets wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transit insurance, such charges should not be included in the assessable value. 9. The last item of deduction pressed for by the appellants is contingent liabilities . The exact nature of these charges was not clear from the record. The appellants stated before us during the hearing that this charge was for collection charges, bad debts and interest on receivables but they could not prove so from the contemporaneous record before us. The nature of the contingent liabilities charge would have to be investigated into by the Asstt. Collector. After he has determined the exact character of this charge, he should decide its admissibility or otherwise in the light of the judgments of the Hon ble Supreme Court in the cases of Bombay Tyres International Ltd. and MRF Ltd. aforesaid. The last prayer pressed for by the appellants was that their price realisation should be treated as cum-duty price and the duty due thereon re-calculated as ordered by the Hon ble Supreme Court in their judgment in the case of MRF Ltd. aforesaid. We agree that after the necessary verification by the Asstt. Collector, the calculations should proceed in accordance with the Hon ble Supreme Court s judgment. 1 ..... 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