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TMI Blog1995 (11) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... ggregate value of clearances of tyres etc. had exceeded two crores There is no provision such as in Explanation II to Notification No. 175/86 dated 1-3-1986 in the said notification and hence the Assistant Collector is quite correct in taking into consideration value of exempted goods also in arriving at aggregate value of clearances effected in the preceding financial year. (B) Sales tax. - As regards sales tax Supreme Court Judgment in Bata Ltd., 1985 (21) E.L.T. Page 9 which has been cited, only lays down that value should be computed by deducting from the whole sale cash price the trade discount and the amount of duty payable on the article at the time of removal and that excise duty leviable not to be taken into account while determining the value of goods under an exemption Notification. It is not pertaining to sales tax the said citation is irrelevant in the case. Supreme Court however in case of Union of India and Others v. Bombay Tyres International Pvt. Ltd. 1984 (17) E.L.T. 329 SC, has held that Taxes Additional Saled Tax, surcharge on sales tax and turn-over tax should be allowed to be deducted from the sale price in order to arrive at the assessable value and also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lain as to why the concessional rate of duty under Notification No. 231/85, dated 11-11-1985 should not be denied to them. It was also alleged that the appellants had mentioned the value of clearance of the said goods less in GP-1 than what they charged in the invoices to the customers. It was also alleged that even if the appellants had been eligible for concessional rate of duty under Notification No. 231/85, they would have crossed the value of clearance of Rs. 5 lakhs up to GP-1, dated 9-5-1986. It was alleged that by showing less value of the goods in GP-1, they availed of the concession of the duty up to GP-1 No. 107, dated 8-6-1986. Thus, it was alleged that the appellants had evaded the central excise duty amounting to Rs. 7,85,512.50. However, this amount was already included in the total duty amounting to Rs. 18,47,160.50. The appellants were issued a show cause notice to explain as to why the duty amounting to Rs. 18,47,160.50 should not be recovered from them under Section 11A. The appellants, in reply to the show cause notice submitted that they had cleared the tubes for use on animal driven vehicles to the tune of Rs. 10,21,554.50 which are exempted under Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oices was the selling price and did not reflect the correct assessable value because the sale price shown in the invoice included excise duty payable and sales tax and other taxes. By giving an example, the appellants contended that if the invoice was valued at Rs. 235/-, it included excise duty of Rs. 100/- and sales tax at a rate of 12% and as per Section 4(4)(d)(ii), sales tax and excise duty is excludible. After careful consideration, the lower authorities passed the order as reproduced in the preceding paragraph. 4. Shri A.N. Haksar, learned Senior Advocate with Shri P.K. Ram, learned Advocate appeared for the appellants and submitted that the main allegations against the appellants are as under : (a) The appellants were not entitled to the benefit of Notification No. 231/85 dated, 11.11.1985 on the ground that the value of clearances during the financial year 1985-86 exceeded Rs. 2 crores; (b) that assuming the appellants were entitled to the benefit of Notification No. 231/85 it was alleged that during the current year i.e. Ist April, 1986 onwards, the appellants had exceeded their first clearances of the said goods of Rs. 50 lakhs under Notification No. 231/85 with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvoice, then the aggregate value of clearances during the financial year 1985-86 would be less than Rs. 2 crores; that the Notification No. 231/85 speaks about tyres, tubes and flaps on which some duty of excise is payable and does not concern itself with fully exempted goods; that partial exemption from excise duty to the extent of 50% of duty leviable under Notification No. 231/85 can only be applicable when some duty is payable on the said goods and that partial exemption canot be granted if the goods are already fully exempted; that the learned Collector was wrong in relying upon the Notification No. 175/86 to come to the conclusion that the clearance of exempted goods is to be included in the value under Notification No. [231/85] as the same have not been specifically excluded by the [exemption] notification itself; that the Hon ble Supreme Court in the case of Coromandal Fertilizers Ltd. reported in 1986 (25) E.L.T. 861 (SC) held that it is not permissible to construe one notification with the aid of another notification; that the construction sought to be placed on the notification by the lower authorities leads to unreasonable results inasmuch as if exempted, clearances are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed goods, they would have provided for such rebate. In the absence of such provisions in Notification No. 231/85, the ld. SDR submitted that the question of excluding the value of tubes and flaps cleared as exempted goods does not arise. 8. On the question whether sales tax payable by the factory though it was not actually paid should be excluded, the ld. DR submitted that as there was no payment of sales tax by the company, therefore, there was no question of any rebate on this count. He therefore, submitted that the lower authorities have rightly held that the aggregate value of clearances during the financial year 1985-86 exceeded Rs. 2 crores and therefore, the demand is legally and fully justifiable. 9. Heard the submissions of both sides. On careful consideration of the submissions made by both sides, case law cited and relied upon as also the evidence on record, we find that the entire issue is about the determination of aggregate value of clearances during the financial year 1985-86 for purpose of claiming concessional rate of duty under Notification No. 231/85. 10. In terms of second proviso to Notification No. 231/85 as amended, the exemption contained in the notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ked to pay that quantum of sales tax and therefore, argued that the word used in the statute is `payable and not actually paid. The ld. Counsel therefore, submitted that in their case, sales tax amounting to Rs. 12,78,446.59 was payable in case they defaulted and therefore, from the invoice price, this amount should be deducted. It was argued that if this amount was permitted to be deducted, the aggregate value of clearances will be less than Rs. 2 crores and therefore, they will be eligible for concessional rate of duty under Notification No. 231/85. The Department is of the view of that the appellants are exempted from payment of sales tax and therefore, there is no question of deduction of sales tax from the aggregate value of clearances calculated from the invoice. We find that in the case of UOI v. Bombay Tyre International reported in 1984 (17) E.L.T. 329, the Hon ble Supreme Court had held that Additional sales tax, Surcharge on sales tax, and Turnover tax should be allowed to be deducted from the sales price in order to arrive at the assessable value, and also octroi where payable/paid by the manufacturer. These taxes if proved to have been paid, should be allowed even if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Notification No. 229/82 was excludible from the aggregate value of clearances. We have reproduced the proviso to Notification No. 231/85 and have also pointed out what the important terms of that notification are. We agree with the arguments of the ld. SDR that in the absence of a clear provision for excluding the value of exempted goods while computing the aggregate value of clearances, such value cannot be excluded. We find that there is no provision for excluding the value of clearances of exempted goods. We find that the aggregate value of clearances of tyres, tubes and flaps is to be computed for such clearances as are for home consumption. There is no restriction as to the type of clearances of exempted goods. The exempted goods are also clearances for home consumption. We do not see any reason to exclude the clearances of exempted goods. In an identical case of U.P. Laminations reported in 1988 (35) E.L.T. 398, this Tribunal had held that There is divergence of judicial opinion on the point whether goods wholly and unconditionally exempted under a notification issued under Rule 8(1) become non-excisable. The Tribunal in a series of decisions has preferred the views of Del ..... X X X X Extracts X X X X X X X X Extracts X X X X
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