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TMI Blog1995 (8) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... e of receipt of this order; (ii) I hold that NEI are liable for penal action under Rule 173Q of the Central Excise Rules, 1944, for the reasons already recorded. I impose a penalty of Rs. 10,000/- (Rupees Ten thousand only) on NEI under Rule 173Q of the Central Excise Rules, 1944 as amended and Rs. 500/- (Rupees five hundred only) under Rule 226 of the Central Excise Rules, 1944. (iii) This order is issued without prejudice to any other action that may be initiated against NEI under the Central Excises & Salt Act, 1944 and the rules made thereunder or under any other law for the time being in force." 2. Briefly stated the facts of the case are that the appellants are engaged in the manufacture of axle boxes which were being classified under Tariff Item 68. The appellants were not filing price lists but claimed the benefit of partial exemption under Notification No. 120/75-C.E. While claiming the benefit under this Notification, the appellants did not file documents like contract with the railways and quotations submitted by them. It was presumed that the appellants were paying duty by declaring the correct price. In November, 1985, however, the department came acr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was an optional one entrusted to the appellants; that invoice price reflected sales price of axle boxes since contract showed separately the different components of price; that the appellants did not indicate the mounting charges in their invoice on the ground that these charges did not form part of consideration paid for sale of axle boxes; that mounting charges were in the nature of after sale service charges, therefore they would not form part of value of the goods sold by the appellants; that it is well settled in law that service charges incurred after clearance of goods would never form part of assessable value under Section 4 of the Central Excises and Salt Act, 1944. In support of his contention, the learned Counsel cited and relied upon the judgment of Hon. Supreme Court in the case of Kelvinator of India Ltd. reported in 1988 (36) E.L.T. 723. 4. The learned counsel submitted that break-up of prices has been given in clause 4 of the contract dated 6-11-1985 which are as under : (a) Roller Bearings L 5603 and L 5064 Rs. 1850.00 (b) Axle Box with components Rs. 1310.00 (c) Mounting charges inclusive of cost of initial greasing and labour etc. 40.00 Rs. Rs. 3200.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollector's findings that only excise duty and sales tax was deductable from the sales price and not charges for any services for installation is patently wrong. Summing of this arguments, the learned counsel submitted that in view of the above submissions the impugned order may be set aside and appeal may be allowed. 6. The learned SDR Shri B.K. Singh appearing for the Revenue submitted that a closer look at the contract reveals as under : PARTICULARS OF THE ORDER "4. Item No. & RSP No. Description Specifications Quantity Price per unit for JAIPUR (Rs.) 1 2 3 4 5 Pt. of Item No. 482 of 1984-85 Roller Bearing Axle Boxes (Broad Gauge) complete with roller bearings for 16.3 tonne axle load on rail Indian Railways Schedule of Technical Requirements No. AB/RB-25-85 2310 (Two thousand three hun- dred & ten only) Rs. 3200/- (Rupees three thou -sand two hun-dred only) Note: The above is subject to the followings: The Roller Bearing Axle Boxes shall conform RDSO's Schedule (i) of Technical Requirements No. AB/RB-25-85 for 16.3 tonnes Roller Bearing Axle Boxes. Before commencing supplies, you shall obtain complete technical clearance of your Drawings and sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and assessed the duty once the applicant opted for the benefit of Notification 120/75-C.E.. That Notification No. 120/75-C.E., dated 30-4-1975 exempts goods falling under Item No. 68 cleared from the factory of the manufacturer on sale from so much of duty of excise leviable thereon as is in excess of the duty calculated on the basis of invoice price (after excluding duty and local taxes, if any, included in such price charged by the manufacturer) in the sale of such goods; that this Notification debars the appellants from claiming fixation of value under Section 4 on presentation of price list; that the contract clauses referred to in the preceding paragraph clearly showed that mounting charges were part and parcel of the contract price, that the contract price was a composite price and that the collection of mounting charges at a later date did not in any way affect their being considered as a part and parcel of the price and that the only deduction out of the invoice was excise duty and sales tax if this price was inclusive of these; that in the instant case, the price was exclusive of the Central Excise duty and local taxes. Having regard to these submissions, the ld. SDR s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication No. 120/75, dated 30-4-1975. In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts goods falling under item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), cleared from the factory of manufacture, on sale, from so much of the duty of excise leviable thereon as is in excess of the duty calculated on the basis of the invoice price (excluding duty and local taxes, if any included in such price) charged by the manufacturer for the sale of such goods : Provided that the aforesaid exemption shall be admissible only if :- (i) the manufacturer files with the Superintendent of Central Excise having jurisdiction a written declaration to the effect that he opts to avail of the said exemption; (ii) the manufacturer avails of the said exemption uniformly in respect of all godds, sold by him, which fall under the item aforesaid; (iii) the manufacturer certifies that the price referred to in the invoice represents the price actually charged by him for the relevant sale and that the price is the sole consideration for the sale; (iv) the invoice pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the 'invoice price'. There is no dispute in this case that the invoice price represented the value of the wagons, less the value of the 'wheel-sets' supplied by the Railways. The invoice price could not be required to include the value of the 'wheel-sets'. But the 'assessable value' would take into account the full commercial value including, that of the 'wheel-sets'. It is in order to mitigate the hardship that may arise by requiring the manufacturer to pay duty on this difference in such cases that the Notification No. 120/75 came to be promulgated. There is nothing in Clause (iv) which enjoins upon the appellant to include the value of the 'wheel-sets'. The contract between the parties does not also require this. The way in which the Tribunal looked at the Notification is neither good sense nor good law. Such construction would make the notification and the exemption contemplated thereunder meaningless. The need for the exemption arose in view of the fact that 'assessable value' was higher than the 'invoice value'. Requiring the former and the latter to be the same as something compelled by Clause (iv) is really to construe the Notification against itself." 12. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that invocation of proviso (1) of Section 11A of the Central Excises and Salt Act was justified in this case. 14. In view of the above findings, the appeals fail on both the counts and are rejected. Sd/- (G.R. Sharma) Member (T) Dated : 7-6-1995 15. [Contra per : Shri Shiben K. Dhar, Member (T)]. - With respect to Ld. Member (Judicial) and Ld. Member (Technical), I differ from the conclusions arrived at and write my separate order as under :- 15A. The contract dated 6-11-1985, which indicates a composite price of Rs. 3,200/- for roller bearing axle boxes, also gives the break-up of this price to indicate what exactly is the price of the goods supplied and what are charges for mounting of these goods. Mounting charges are shown as Rs. 40/-. Para-11 of the Contract dealing with payment stipulates 100% payment of the price including excise duty at the time of delivery duly supported by Gate Pass but excluding mounting charges of Rs. 40 per roller bearing axle box. It also indicates that mounting charges @ Rs. 40/- will be paid after the goods have been mounted on the wheel sets and this claim would have to be supported by a certificate from the inspector that the ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. This arguement of the Ld. Collector would appear to suffer from a serious infirmity. Facility of Invoice Price under Notification No. 120/75-C.E. was allowed to mitigate the hardship which payment of duty at the full assessable value might cause in certain situations. As held by the Hon'ble Supreme Court in case of Texmaco Ltd. v. C.C.E., Calcutta, 1995 (77) E.L.T. 501 (SC), the Notification posits and predicates the possibility that the invoice value could be lesser than the assessable value and in order to mitigate the hardship on the manufacturer of being called upon to pay duty on the value in excess of the invoice price, seeks to exempt manufacturers from payment of duty in excess of the duty calculated on the basis of the invoice price. 18.1 Holding that ordinarily "Assessable Value" would take into account the full commercial value of goods, including that of "Wheel Sets" supplied by Railways, the Apex Court held that the need for exemption arose in view of the fact that the "Assessable Value" was higher than the invoice price and the Notification No. 120/75 was intended to mitigate the hardship on the manufacturer being called upon to pay duty on the value ..... X X X X Extracts X X X X X X X X Extracts X X X X
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