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TMI Blog1993 (9) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... considerations whereby they had collected extra amounts on account of special secondary packing charges, delivery and commissioning charges which should have formed part of the assessable value. The further allegation was that the appellants had failed to declare the correct pattern of sale inasmuch as they had sold the goods through their own depots which constituted a separate class. It was also alleged that the appellants had manufactured and cleared excisable goods without determining and discharging proper duty thereon and that they had entered into secret understanding with a fictitious dummy unit in the name and style of M/s. Red Ring Electrical Appliances Company with the intention of evasion of duty by holding out that M/s. Red Ring is an independent unit while it was in fact a related person of the appellant within the meaning of Section 4(4)(c) of the CESA, 1944. The appellants filed a detailed reply to the show cause notice and on adjudication, the Collector, by order dated 25-5-1988 held that the proviso to Section 11A of the CESA is attracted for sales through M/s. Red Ring for the extended period of 5 years while there is no suppression in respect of other sales and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Rules 5 and 7 of the Valuation Rules, 1975. The issue of valuation of goods sold through depot is settled by a series of decisions of the Hon ble Supreme Court and of this Tribunal. In the case of Indian Oxygen v. CCE - 1988 (36) E.L.T. 723 SC, it has been held that once the ex-factory wholesale normal price is known then the depot price is not relevant and all the clearances will have to be made at the ex-factory wholesale price. In that case the factory was at Visakhapatnam and the depots were at Vijayawada and Rajamundry, etc. and the price at depots was higher than the approved price list. The Court held that once the factory gate price is ascertainable then that should be the basis upon which the value is to be determined for all clearances. In the case of CCE, Madras v. Ashok Leyland - 1987 (29) E.L.T. 530 the Tribunal held that sales to main dealers, retail sales, removals for captive use and stock transfers to regional sales offices should be assessed at the normal price under Section 4(1)(a) i.e. the price charged to the main dealers. The argument of the department that stock transfers should be reassessed on the basis of eventual sales at ex-depots was rejected and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shutter. Some of the Directors of the assessee and the partners of this dummy firm are related to each other and the officials of the assessee namely, R.N. Sabharwal, Deputy General Manager, Shri P.D. Singh, Manager, Bombay office are functioning from the assessee s company and the branches and they are acting at the authorised signatories/officials of the said dummy firm. Even the clerical, technical and management staff of the assessee and that of the dummy firm are managed by the officials of the assessee. The expenditure shown as incurred by the dummy firm in the various heads in the balance-sheet is nothing but a flow back to the assessee inasmuch as the dummy firm does not have arty clerical, managerial, technical staff of its own nor any official premises except one storage place as indicated above. The selling price shown through this dummy firm is hiked exorbitantly to the extent of 25% to 30% in comparison with the price declared to the department. The orders placed by the customers for the domestic electrical appliances with the assessee directly are diverted by the assessee to the dummy firm. The assessee entertains all the correspondence of the customers of the said du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and the price realised by M/s. Alok Textiles was not relevant. In the case of Cosmos India Rubber Works v. Union of India - 1988 (36) E.L.T. 102 (Bombay) the Hon ble Bombay High Court held that the language of proviso( iii) to Section 4 applies only where generally all the goods are sold through a related person. We, therefore, hold that the factory gate price is the price applicable for determining the assessable value of sales made to or through M/s. Red Ring Electrical Appliances. 3.4 Special Secondary Packing Charges : The finding of the adjudicating authority on this aspect is as under : As regards collection of extra amounts on special secondary packing, I find that packing does not become special only because the buyer has requested for it. I find that in all outstation deliveries corrugated boxes or, wooden crate packing is used. This packing is a normal secondary packing and does not become special only because it is at the instance of the buyer. In fact this appears to be the modus operandi of the assessee whereby he obtains a letter from his customers, requesting for special packing. If this packing were of a different nature than that ordinarily used e.g. thermocole, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in the assessable value wherever charged . In the reply to the show cause notice the appellants have stated that delivery and commissioning charges are not received by the appellants and it is a matter between the retailer and the consumer. These are post clearance expenses - the purchaser of the washing machine normally takes delivery with the instruction booklet from the dealer and the cartage is either paid by the consumer directly to the cartman or paid to the dealer who arranges delivery of washing machine to the consumer. The stand of the appellants regarding non-realisation of the delivery and commissioning charges has not been rebutted by the Department. Therefore, these charges are to be excluded from the assessable value of the goods. 3.6 Advertisement Charges : The Collector has found as follows : The assessee has contended that they are not liable to pay duty on the 0.5% of the total sales by their dealers and which is used towards the advertisement expenses. From the general practice prevailing between the assessee and the dealers I find that the assessee had permitted their dealers to spend upto 2% of their total purchases on advertisements and they undertake to r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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