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TMI Blog2012 (12) TMI 918X X X X Extracts X X X X X X X X Extracts X X X X ..... as been artificially inflated. The “additional consideration” which is includible in the assessable value of the goods is the consideration for the goods being sold, which is in addition to the declared sale price. Any amount being received by a manufacturer from the buyer of the goods cannot be termed as “additional consideration” and added to the value of the goods it must be shown that it is sale of the goods, not for some other transaction. Thus if the amount being received by the Assessee is for some service like transportation, transit insurance etc. being provided to the buyer after clearance of the goods from the place of removal, that amount would not be includible on the assessable value. The burden is on the Department to prove that the price at the place of removal had been depressed and the balance price is flowing as additional consideration by inflating transportation/insurance charges. So far as the period prior to 28-9-1996 is concerned, the price for the delivery at the factory gate would be applicable even in the cases where the appellant after clearance of the goods from the factory had arranged the delivery to the customers, as there is no allegation that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g freight at equalised rates. In respect of sales in and around Ludhiana, the equalised freight was being charged @ Rs. 22/- per crate and for deliveries to buyers in far off areas, the equalised freight was being charged @ Rs. 11/- per crate. The department was of the view that in respect of sales, where the appellant were arranging the transport and were recovering the freight charges on equalised basis, the amount recovered as equalised freight, in excess of the freight expenses actually incurred would be includible in assessable value. On this basis, a show cause notice dated 31-1-1997 was issued for demand of allegedly short paid duty amounting to Rs. 54,06,117/- during the period from 1-3-1994 to 31-7-1995, along with interest and also for imposition of penalty on the appellant under Section 11AC of Central Excise Act read with Rule 173Q of Central Excise Rules, 1944. This show cause notice was issued by invoking extended period under proviso to Section 11A(1). Similar show cause notices were issued to the appellant for various periods on 29-2-1996, 3-6-1996, 31-10-1997, 9-1-1997, 27-5-1997, 29-8-1997 and 23-1-1998 for the periods from 1-8-1995 to 31-8-1997. The total duty de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Procedure Rule as according to this Rule, when a company is being wound up, the appeal filed by the company shall abate unless an application is made for continuation of such proceeding by the executor, administrator, receiver, liquidator or other representative of the appellant or the respondent, as the case may be. 1.6 Against the above final order dated 22-2-2001 of the Tribunal, the appellant filed an application under Section 35C(2) of Central Excise Act, 1944 for rectification of mistake apparent from record (ROM No. 15/2006), which was dismissed vide order dated 8-12-2006. The appellant, thereafter filed a miscellaneous application No. 228/2008 for restoration of this ROM, which was allowed vide miscellaneous order No. 545/2008-EX., dated 8-5-2008 [2008 (229) E.L.T. 252 (Tri. - Del.)] and by this order, the ROM was also dismissed on the ground that the same had been filed beyond the period of four years from the date of the final order. 1.7 Against the above order of the Tribunal, the appellant filed CWP No. 1116/2009 before Hon ble Punjab Haryana High Court. Hon ble High Court vide order dated 30-10-2009 stayed the coercive steps for recovery subject to the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the buyers in far flung areas and claiming its deductions from the assessable value, had charged lesser amount towards freight, that the Commissioner has wrongly relied upon the Tribunal s decision in the case of Bihar Caustic Chemicals Ltd. v. C.C.E., Patna reported in 1998 (97) E.L.T. 335 (Tribunal), as that case pertains to contract sales where a separate price is negotiated in each case, while in this case there are no contract sales, that when the price for sale to independent buyers at factory gate is available and that price is not disputed, the price for delivery at the factory gate has to be adopted in all the cases and there is absolutely no justification for adopting any other price in the cases where the appellant had arranged the transportation to the customer s premises, that in any case there is no justification for invoking extended period under proviso to Section 11A(1), as all the relevant facts were known to the department and there was absolutely no suppression of any fact on the part of the department and, as such, the bulk of the duty demand is time barred, that for the same reason, there is no justification for imposition of penalty on the appellant under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate at certain price and there is no dispute about the correctness of that price, that price has to be treated as for normal price for all the sales including the cases where the transportation was arranged by the appellant. As against this, the department s allegation is that in the cases where the appellant had arranged the transportation, price is not the sole consideration for sale and that the freight differential, that is, the difference between the amount charged at equalised rate from the customers towards freight and the freight expenses actually incurred, should be treated as additional consideration flowing to the appellant and should be added to the assessable value. The appellant in support of their contention rely upon the Apex Court judgment in the case of Indian Oxygen Ltd. v. C.C.E. reported in 1988 (36) E.L.T. 723 (S.C.), wherein it was held that if assessable value at the factory gate is available, the same would be applied to all the sales. 7. During the period till 27-9-1996, Section 4 which govern the determination of assessable value, was as under :- Section 4. Valuation of excisable goods for purposes of charging of duty of excise. - (1) Where under thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... portation from the place of removal to the place of delivery shall be excluded from such price. (3) The provisions of this section shall not apply in respect of any excisable goods for which a tariff value has been fixed under sub-section (2) of Section 3. (4) For the purposes of this section, - (a) assessee means the person who is liable to pay the duty of excise under this Act and includes his agent; (b) place of removal means - (i) a factory or any other place or premises of production or manufacture of the excisable goods; or (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty, from where such goods are removed; (c) related person means a person who is so associated with the assessee that they have interest, directly or indirectly, in the business of each other and includes a holding company, a subsidiary company, a relative and a distributor of the assessee, and any sub-distributor of such distributor. Explanation. - In this clause holding company , subsidiary company and relative have the same meanings as in the Companies Act, 1956 (1 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 were amended by expanding the definition of place of removal as given in Section 4(3)(b) of the Act by including the depot, premises of a consignment agent or any other premises, where the excisable goods are sold after their clearance from the factory and also by adding the definition of time of removal . The other provisions of Section 4 as it stood w.e.f. 28-9-1996 were same as the provisions of Section 4 as it stood during the previous period. Thus, throughout during the period of dispute, the assessable value was the normal price which is - (a) the price at which such goods are ordinarily sold by the assessee to a buyer in course of wholesale trade; (b) the sale is for delivery at the time and place of removal; (c) the buyer is not a related person; and (d) the transaction is such that the price is the sole consideration for sale. 7.2 Section 4(1)(a) also provided that an assessee could have different normal prices for different classes of buyers. The classification of buyer could be on the basis of geographical location and it was permissible for an assessee to have different basic prices or one basic price with different discount rates for buyer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il. Rule 6(b) prescribed the method for determining normal price when the goods are not sold, but are cleared for captive consumption. Rule 6(c) prescribed method for determining normal price when the assessee so arranges that the goods are generally not sold in course of wholesale trade except two or three related person. Rule 7 prescribed best judgment method in other situation. Thus, from reading of Section 4 as it stood during the period of dispute, it is clear that recourse to Section 4(a)(b) read with Central Excise (Valuation) Rules, 1975 could be taken only if the normal price was not ascertainable. When normal price of the goods was ascertainable for the reason that there are sales to independent wholesale buyers for delivery at the factory gate and correctness of that normal price is not disputed, there was no occasion to take recourse to Section 4(1)(b) and apply the Central Excise (Valuation) Rules as that normal price would be applicable in respect of all the sales. 8. In the present case, as mentioned above, there is no dispute that about 17% of the sales were to independent buyers, at the factory gate and it is not the allegation of the department that those were n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Indian Oxygen Ltd. v. C.C.E. (supra), wherein the Apex Court with regard to Section 4, as it stood during the period prior to 28-9-1996, had held that when the goods are partly sold from the depot and partly from the factory, it is the ex-factory price, which would be the basis of valuation under Section 4, even for the goods sold from the depot and that the delivery and collection charges for gas cylinders are not includible in the assessable value. Thus, so far as the period prior to 28-9-1996 is concerned, the price for the delivery at the factory gate would be applicable even in the cases where the appellant after clearance of the goods from the factory had arranged the delivery to the customers, as there is no allegation that the in 17% sales where the goods had been sold to independent buyers for delivery at the factory gate, the price is not the correct price and had been artificially depressed. 9. As regards, the period w.e.f. 28-9-1996, in respect of this period, it is not the department s case that the sales were not at the factory gate but at buyer s premises on FOR destination basis. Once, the department accepts that the sales were at the factory gate and the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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