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TMI Blog1990 (10) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... osed and differential duties demanded. Hence these appeals before us. 2. We heard Shri V. Lakshmikumaran, the learned Advocate for the appellants and Shri L. P. Asthana, Jt. CDR for the respondent Collector. 3. The facts in the present matter are that the show cause notice alleged that the sales from the depots were not retail in character as made out by Fenner India Ltd. but were wholesale in nature. The show cause notice, therefore, proposed to adopt the sale price prevailing at the depots (in respect of sales made through depots) for arriving at the assessable value. A total duty of Rs. 76,18,614/- was consequently sought to be demanded in the show cause notice, from Fenner (India) Ltd. While arriving at the assessable value in respect of the sales made through the depots, certain deductions towards transport charges, taxes paid and certain branch expenses were abated. The show cause notice proposed to demand duty for the period 1982-83 to 1986-87. The main thrust of the allegations in the show cause notice is that Fenner have suppressed/mis-declared information in showing that the sales from the depots were retail in character while they were in fact, wholesale in nature. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch in that year, but sales were effected through that depot in that year but even according to the calculations adopted in the show cause notice, the net realisation for that year from that depot was less than the price-realisation which should have been there on the basis of the assessable value on which excise duty was already paid. This is yet another instance, according to Fenner, to prove the genuineness of factory gate sales. The learned Advocate submitted that the total duty demand of Rs. 76 lakhs worked out in the show cause notice is on a price difference of 1.5% between the factory gate price and the depot price. In other words, even according to the allegations in the show cause notice, the price difference between the depot price and the factory gate wholesale price was only about 1.5%, even without deducting the permissible deductions as pleaded in the written reply to the show cause notice. 5. Shri Lakshmikumaran pleaded that the question now raised by the Department in the show cause notice, was specifically raised on a number of occasions earlier while approving the price lists, and also subsequently. He stated that thus, in the year 1975, when new Section 4 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Advocate that the demand raised in the show cause notice issued to BMF was in respect of sales of V-belts effected by BMF to Fenner Branch to be sold ultimately to the customer. He stated that these sales of belts sold by BMF to Fenner were already included in the final sale price realised by Fenner from their customers which formed the basis for the show cause notice to Fenner. Accordingly, it was submitted that the demand raised by the show cause notice issued to BMF is already included and forms part of the demand raised in the show cause notice issued to Fenner. The learned Advocate submitted that the show cause notice be quashed both on merits as well as limitation. 8. In reply to the arguments advanced by the learned Advocate for Fenner and BMF, the learned Jt. CDR contended that the sales effected at the depots of Fenner were not retail but wholesale. Further the dealers who purchased the goods at the depot would form a different class of buyers and the price charged to them would, therefore, be separately applicable in terms of Clause (i) of Section 4(1)(a). The learned Jt. CDR cited the decision of the Supreme Court in the case of Mc Dowells - reported at AIR 1986 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al and sold to selected buyers. We do not see any such allegation in the show cause notice. Even otherwise, the Collector s order in this regard is not based on acceptable evidence and, therefore, cannot be sustained. 11. We also find that as argued by the learned Advocate for the appellants, there are some flaws in the reasoning of the Collector of Central Excise, Madurai in the impugned order. The appellants submitted before us (as they did before the Collector) that if we exclude the price of traded V-belts (boughtout from BMF) from the total price realised by any depot and deduct the permissible deductions permitted by the Collector, the net realisation from the depot would be much lower than the assessable value already approved. They made a further plea that in respect of a number of depots during the period in question, there were huge sales and yet no demand has been made because even according to the Department s own calculations, the net realisation from those depots in those periods was less than the assessable value already adopted for the factory gate sales. These two factors indicate that the factory gate price could not be considered as artificial. We make this obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory gate price declared by the appellants, the order that there should be a separate price for assessment based on the wholesale price at the depots cannot be sustained. In this context we recall the submissions made, without contradiction by Revenue, that the difference between the factory gate price and the sales depot price was marginal and in some cases and sometimes the difference is even negative. 14. In Duphar Interfan Ltd. (supra) the Supreme Court was referring only to extra charges, for packing and distribution costs when delivery was not at factory gate. The present matter does not have any issue relating to packing charges and, therefore, this citation is irrelevant. 15. In Usha Martin Industries (supra) (paragraph 7) the Supreme Court held that where there is a factory gate price, the wholesale cash price/normal price was ascertainable at the time and place of removal itself and it was not lawful to assess the goods on the subsequent actual sale price or ex-depots as this was not the price at the time of removal or at the place of removal. In this judgment the Tribunal took note, while approving the Appellate Collector s finding that the wholesale price was not con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale. Place of removal" under Section 4(4)(b) has been defined to mean a factory or any other place or premises of production or manufacture of the excisable goods or a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty, from which such goods are removed. The scope of determination of value has been explained and reiterated by this Court in Union of India and Others etc. etc. v. Bombay Tyre International Ltd. etc. etc. -1983 (14) E.L.T. 1896 (SC) = 1984 1 S.C.R. 347. Following the principle of the said case the Tribunal noted in the judgment under appeal that the price ex-factory is ascertainable. If once that is the position as the Tribunal rightly pointed out, the issue of deduction of rate from the prices ex-depots does not survive for the decision. But if the ex-factory prices were not ascertainable and the goods were to be assessable ex-depots, then it would be for the manufacturer to clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment and local authorities, share holders of a co-operative society or an employee of a manufacturer constitute different classes of buyers. In the present matter no factual justification has been made to show that sales at the factory and the sales at the depots are to different classes of buyers. The Department s view is that the factory gate sales are restricted to selected buyers. To extend the meaning of the words class of buyers to cover the so called selected buyers at the factory gate and buyers from the depots would not only be unjustified but would go directly against the Supreme Court s judgment in Indian Oxygen Ltd. (supra). It is not as if the appellants want to give a special low price and want to nominate a particular class of buyers. For that purpose it is the other way round in that it is the Department who wants to treat the buyers at the depots as a separate class of buyers. In the absence of any legal and factual justification we cannot accept this argument. 22. In the result we take note that the appellants have an approved factory gate price and order that this price should form the normal price for assessment, even for goods which are ultimately sold at th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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