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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 ..... ory gate to independent buyers. About 17% of the sales of the appellant were for delivery at the factory gate in respect of which the excise duty was being paid at the above-mentioned prices. In respect of sales at the factory gate, the buyers were arranging their own transport. In remaining sales, the appellant were arranging the transport and in addition to the price at the factory gate they were charging 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 appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter was adjourned and finally this matter was listed on 22-2-2001 when the appellant's counsel was present. At that time, the appellant's counsel submitted that the appellant company is under liquidation. Since, the liquidator had not sought to represent the firm in this appeal, the Tribunal vide order dated 22-2-2001 [2002 (147) E.L.T. 745 (Tri. - Del.)] dismissed the appeal as abated in terms of Rule 22 of CESTAT 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 (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uniform price of the product throughout the area, that from this statement, it is absolutely incorrect to infer that the transportation charges at equalised rate was additional consideration, that it is a matter of common practice that MRPs of consumer products are kept constant throughout the country by the way of extending discounts at different rates in different regions and in this case, the appellant instead of giving discount to 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 transp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one more allegation that the appellant have received from their buyers interest free amounts as deposit for the crate and notional interest @ 18% per annum on such deposit should be includible in the assessable value, this allegation was dropped by the Commissioner and, as such, this is not the point of dispute here. The appellant's contention is that when during the period of dispute, there were sales to the buyers for delivery at the factory gate 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lers, to dealers (being related persons), who sell such goods in retail; (b) where the normal price of such goods is not ascertainable for the reason, that such goods are not sold or for any other reason, the nearest ascertainable equivalent thereof determined in such manner as may be prescribed. (2) Where in relation to any excisable goods the price thereof for delivery at the place of removal is not known and the value thereof is determined with reference to the price for delivery at a place other than the place of removal, the cost of transportation 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 goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch Act on such goods equal to, any duty of excise under such Act, or the additional duty under Section 3 of the Customs Tariff Act, 1975 (51 of 1975), already paid] on the raw material or component parts used in the production or manufacture of such goods) from the duty of excise computed with reference to the rate specified in such Act, in respect of such goods as reduced so as to give full and complete effect to such exemption; and (ii) in any other case, the duty of excise computed with reference to the rate specified in such Act in such Act in respect of such goods. (c) "wholesale trade" means sales to dealers, industrial consumers, Government, local authorities and other buyers, who or which purchase their requirements otherwise than in retail." 7.1 With effect from 28-9-1996, the provisions of Section 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .3 From reading of the provisions of Section 4, as the same stood during the period of dispute, it is also clear that in terms of the provisions of Section 4(1)(b) only in a situation, where the normal price of such goods was not ascertainable for the reason that such goods are not sold or for any other reason, the nearest ascertainable equivalent was to be determined in the manner prescribed by the Government and for such cases, the Central Government had framed Central Excise (Valuation) Rules, 1975. Rule 4 of the Valuation Rules prescribed the method for determining normal price when the price at the time of removal was not available for the reason that there was no sale at that time. Rule 5 prescribed the method for determining normal price when price is not the sole consideration for sale. Rule 6(a) prescribed the method for determining normal price when the goods are not sold in course of wholesale trade, but are sold in retail. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. In the circumstances of the case, we are of the view that the Apex Court's judgment in the case of Baroda Electric Meters Ltd. v. C.C.E. reported in 1997 (94) E.L.T. 13 (S.C.), would be applicable, wherein the Apex Court held that the differential between the freight charged on equalised basis and actual freight expenses is not includible in the assessable value, as duty of excise is tax on manufacture and not a tax on the profit made by the assessee on the transportation, as in this case there is a price for delivery at the factory gate to independent buyers whose correctness is not disputed. In this judgment, the Apex Court relied upon its earlier judgment in the case 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-f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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