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TMI Blog1996 (12) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... payable. In this connection, he has cited the decision of the Tribunal in the case of CCE, Hyderabad v. M/s. VST Inds. reported in 1991 (52) E.L.T. 59 (Tribunal) = 1991 (32) ECR 346. The Tribunal in that case in paras 25 26 has held as under :- The language of Section 4 and the extract of the Supreme Court s judgment reproduced above show that the interpretation as given by the Supreme Court alone is the correct one. Rule 5 of Valuation Rules and Section 4 of the Act have to be read together. A harmonious construction can lead only to one conclusion - that the extra accrual should be added to the wholesale price and the assessable value worked back after allowing admissible deductions. Addition of such extra accruals to the assessable value would distort the meaning of the section because there is no way in which abatement of excise duty which is permitted by Section 4 can be given if the extra accrual is directly added to the assessable value. This view is best illustrated by taking instances where the rate of excise duty is 100% and, say, 150%. If the extra accrual is Rs. 100/- and it is added to the assessable value the entire accrual is to be paid as excise duty when the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y is paid is required to be allowed. Since further duty has been demanded from them on account of the extra recovery made by the appellants and that amount has to be added to the wholesale price, the duty that would finally become payable and which may not have been recovered from the customers will be required to be paid. Section 4(1)(a) of the CEA read with Section 4(4)(d)(ii) is clear in this regard. What is to be taken note of is the duty which is payable and not what is actually recovered from the customers. It was pointed out to the learned Counsel that this Tribunal in the case of M/s. Auto Inds. v. Asstt. Collr. of CE, Madras reported in 1995 (77) E.L.T. 325 has held that inasmuch as no duty was collected from the customers, the question of abatement of the duty which was paid subsequently by them would be allowable. It was also brought to the notice of the learned Counsel that the Hon ble Supreme Court in the context of exemption notification in the case of Asstt. Collr. of C.E. v. M/s. Bata India Ltd. reported in 1996 (84) E.L.T. 164 (S.C.) has held for the purpose of arriving at the value of the goods for exemption purposes from the sale price the question of abatement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the manufacturer is upheld, he will be entitled to sell footwear at a price of more than Rs. 60.00 per pair and yet will be able to claim the benefit of the exemption notification and not pay any duty. An anomalous situation will arise. The consumer will pay ex-duty price of more than Rs. 60/- per pair and bear the brunt of a tax burden which is not payable by the manufacturer in law. The manufacturer will enjoy the benefit of the exemption notification by deducting an amount on account of non-payable excise duty from the price and thereby make profit in the guise of payment of tax. At the same time, the revenue will be deprived of the duty which is payable on footwear valued at above Rs. 60.00. 13. If the ex-duty value of the footwear given in the chart was Rs. 60.00 or less, then that should have been the excise value. There could be no reason for fixing the price at above Rs. 60.00 except for the purpose of making a larger profit. A manufacturer at the time of clearance of the goods has to indicate in all the documents relating to assessment, the amount of duty which will form part of the price at which such goods are to be sold. In the instant case, the manufacturer could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Company fell short of Rs. 60.00 per pair, then by virtue of the exemption notification no duty was payable on the goods. In such a situation, a manufacturer could not include in the price of the goods any amount by way of excise duty." 5. The question to be considered is whether in the case of the goods which have been sold at a particular price and where duty is subsequently demanded in respect of the same in terms of Section 4(1) read with Section 4(4)(d)(ii) the amount of duty which became payable later and which has been demanded can be abated from the sale price or not. For this purpose it is necessary to refer to Section 4 of the CEA, 1944. Section 4(1)(a) reads as under : Section 4. Valuation of excisable goods for purposes of charging of duty of excise. - (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value, shall, subject to the other provisions of this section, be deemed to be - (a) the normal price thereof, that is to say, the price at which such goods are 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 buye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the goods under assessment then they are excludible from the `value . It cannot be said that if such taxes are payable and have been paid by the assessee, he cannot claim deductions in respect of such taxes only on the ground that they are not recoverable from the customers. 36. In their clarificatory judgment in the case of Union of India v. Bombay Tyres International, 1984 (17) E.L.T. 329 (S.C.), Hon ble Supreme Court have held under :- Additional sales tax, surcharge on sales tax and turnover tax should be allowed to be deducted from the sale 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 they are paid periodically to the relevant taxing authorities in accordance with the relevant provisions of taxing statutes/rules. 37. It is seen that the appellants had claimed deduction on account of irrecoverable taxes on equalised basis by arriving at the average of such taxes. 38. The Collector, Central Excise had observed that the non-recoverable taxes were not included in the factory cost but covered under selling and distribution over head account. He c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for abatement has to be considered in our view under Section 4(4)(d)(ii). Section 4(4)(d) envisages that value does not include amount of duty of excise, sales tax and other taxes if any payable on the goods. The Tribunal in the above case has clearly held that the word payable has to be interpreted in the manner that payment is made by the assessee towards those elements and there is nothing to show that tax paid should be recovered by the assessee from the customers. What therefore falls for consideration in this background is whether the appellant will be entitled to abatement of duty which is now asked to be paid even though not recovered from the customers at the relevant time of sale and also whether the ratio of the judgment of the Hon ble Supreme Court which has been given in the context of exemption Notification and in which case Section 4(1)(a) was not the focus of interpretation would be applicable to the facts of the present case. 6. We find there is a divergence of views held by different Benches in this regard. In the following cases, the Tribunal has held that element of duty which is demanded subsequently is abateable from the sale price : 1. 1993 (49) ECR 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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