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TMI Blog1997 (12) TMI 337X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of Madhya Pradesh and Kerala claiming deduction of 8% trade discount and another in respect of Maharashtra claiming deduction of 3% trade discount. On approval of the price lists clearances were made on payment of appropriate duty. Enquiry showed that in regard to Madhya Pradesh and Kerala, prices collected from wholesale dealers were higher than the approved prices. It was also found that in regard to sales in Maharashtra appellant collected charges for transportation, insurance and incidental expenses in excess of the amounts spent actually and without paying central excise duty on the differential amount. 3. Show cause notice dated 4-5-1990 was issued reciting the above facts, alleging wilful suppression of material fact with intent to evade duty and proposing demand of differential duty on the above basis and imposition of penalty. Though the appellant resisted the notice, the Collector confirmed the demand of Rs. 4,52,114.65 for the period from January, 1985 to the end of financial year 1988 in respect of goods cleared to Madhya Pradesh and Kerala and of Rs. 1,58,239.70 in respect of the clearances made to wholesale dealers through Bombay branch during the years 1985 to 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicating authority. 6. The show cause notice refers to proposal for demand on two separate counts - one on account of goods stock transferred to agents in Madhya Pradesh and Kerala and the other in relation to certain excess amounts collected in respect of sales to wholesale dealers at Bombay branch. Claims on these counts are Rs. 4,63,877.10 and Rs. 1,58,239.70 respectively. Appellant contended that a sum of Rs. 14,09,352/- had been paid to Maharashtra State Government by way of turnover tax and additional sales tax in respect of goods cleared to Bombay branch office and sold from this branch, that this amount had not been recovered from dealers and could not be recovered from dealers as they are irrecoverable and central excise duty had been paid originally without deducting this amount and since the matter is being re-opened, assessable value of the clearances made in all the regions should be re-determined by deducting the aforesaid tax amount and if such exercise is done, no further amount of central excise duty would be found due. It is stated that differential assessable value in respect of Madhya Pradesh and Kerala arrived at by the Collector was Rs. 9,84,345/- and the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l amounts over and above the prices reflected in invoices and had sold goods to two concerns at much lower prices. The adjudicating authority added the extra amount collected to the original assessable value and determined the assessable value of the goods sold to the two concerns on the basis of higher price paid by the two concerns to another supplier. The adjudicating authority also rejected the claim for deduction of additional sales tax paid by the assessee and not deducted originally in determining the assessable value. The assessee did not claim deduction at the time of clearance of the goods and did not file refund claim within the time prescribed immediately after the finalisation of sales tax assessment or payment of additional sales tax. The Tribunal, in allowing the deduction of additional sales tax, observed as follows :- ................The whole issue of assessment has been reopened by the authorities and the authorities have come to the conclusion that the appellants are required to pay higher duty as they had realised some extra amounts over and above the invoice value. The revenue, is therefore, entitled to the recovery of higher duty in view of the position. . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of duty payable by an assessee, in cases where the goods are subjected to ad valorem rate of duty, depending on the value of goods and also the rate of duty. Therefore, the determination of correct rate of duty for the goods on which differential duty is demanded is the first step before quantifying the demand. [Emphasis supplied] 10. In Bakeman s Home Products Pvt. Ltd., 1997 (95) E.L.T. 278 (T), imported goods were cleared, mis-declaring description, quantum and value. Confiscation and demand of differential duty was ordered. Besides contesting these allegations, the importer sought to reopen classification declared in the Bill of Entry. The Tribunal upheld his right to do so in the following words following the decision in Lili Foam Industries (P) Ltd., 1990 (46) E.L.T. 462 (T) :- When allegation is made of misdeclaration of value by adjusting the value of one item under one sub-heading with the value of another item falling under another sub-heading to take illegal advantage of lower rate of duty available for an item, the same can be sought to be resisted by pleading that on correct classification there would be no duty advantage for the importer and the alleged misdecl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the extent of duty short levied to be determined? This can be done only by examining the various elements which were taken into consideration in originally determining the assessable value and rate of duty and verifying if there were omissions or errors committed. Assessable value and duty have to be recalculated after rectifying the errors and supporting the omissions. This is also subject to the mandate of Section 4 of the Act and particularly of sub-section (4) of Section 4. Thus correct duty payable on the correct assessable value can be arrived at. This amount of duty less the duty paid originally would be the short-levied duty which can be demanded under Section 11A of the Act. Thus determination of quantum of short-levied duty also involves recomputation of correct assessable value on the basis of true and correct wholesale price and legitimate deductions as per the provisions of Section 4 and adoption of correct rate of duty. It may be that the statutory authority detected an error in an element having a bearing on the assessable value or rate of duty and proposes determination of correct assessable value and duty and demand of such determination, the authority failed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch, Rs. 3,26,484.13 is adjusted leaving a balance of Rs. 10,82,865.00, which according to the appellant has to be deducted from the differential assessable value of goods cleared to Madhya Pradesh and Kerala, namely, Rs. 9,84,345.03. If this is permissible, no differential duty would be payable on account of goods cleared to Madhya Pradesh and Kerala. According to Section 4(4)(d)(ii) of the Act, assessable value in respect of any excisable goods does not include excise duty, sales tax and other taxes payable on such goods. Excise duty and taxes payable on specific goods is deductible in quantifying the assessable value of such specific goods. What appellant seeks is deduction of a part of turnover tax and additional sales tax paid in respect of specific goods, that is, goods removed to Bombay branch and sold in Maharashtra State, from out of assessable value (or differential assessable value) of other goods removed to Madhya Pradesh and Kerala. This is not permitted by Section 4(4)(d)(ii) of the Act. If any such taxes had been paid in respect of goods removed to Madhya Pradesh and Kerala and have not been deducted in quantifying assessable value (or differential value), deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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