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TMI Blog1990 (10) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... articles at the factory gate and the remaining nearly 30% through its various depots at Ahmedabad, Calcutta, Delhi, Indore, Nasirabad, Kundi, Ludhiana, Madras and Meera. The excise duty is being paid regularly. For the first time, the respondent No. 3 issued a notice dated 25-8-1984 asking the petitioner to deposit the excise duty on the elements of 'Depot Service Charges' on the sale of manufactured articles through the various depots of the Company. After the reply submitted by the petitioner, the Assistant Collector, Central Excise, Kota, passed an order dated 7-11-1984, directing the petitioner to deposit excise duty on the elements of Depot Service Charges. Against this order, an appeal was filed before the Collector (Appeals), Central Excise and Customs, New Delhi, who vide his order dated 26-4-1985, set aside the order of the Assistant Collector, dated 7-11-1984, as also the show cause notice dated 25-8-1984. Against this order, the Revenue filed an appeal before the Central Excise Tribunal, New Delhi, which was dismissed as having become time-barred. Notwithstanding the orders passed by the Collector (Appeals), respondent No. 3, Supdt. Central Excise, issued a fresh demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titions as well. 5. Learned counsel for the petitioners has very vehemently submitted that the petitioners' case is covered by Sec. 4(l)(a) of the Central Excises and Salts Act, 1944 (hereinafter referred to as the 'Act of 1944') and that Sec. 4(1) (b) of the Act of 1944 is not applicable to the petitioner because the normal price of the manufactured goods is ascertainable at the factory gate. He has also drawn our attention to sub-sec. 4(b) of Sec. 4 of the Act of 1944, explaining the meaning of the word 'place of removal'. 6. Our attention has also been drawn to Union of India v. Bombay Tyre International Ltd. [1983 (14) E.L.T. 1896] which is the leading case on this subject. This case was again considered by the Supreme Court in Indian Oxygen Ltd. (supra), and in this view of the matter, he has submitted that the interpretation of Sec. 4 of the Act of 1944 has been settled by the highest court of the land, and therefore, the respondents cannot take any action nor issue any notice in contravention of such an authoritative pronouncement. He has further submitted that till now, the judgment of the Tribunal also is in favour of the petitioners and the Department is fully bound by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority has only jurisdiction to hear an appeal which can be filed only after an order has been passed by the Assessing Authority. He has therefore submitted that the petitioner has no alternative efficacious remedy, whatsoever. He has placed reliance on a decision of the Karnataka High Court in Y. Moideen Kunhi and Others v. Collector of Central Excise, Bangalore and Others [1986 (23) E.L.T. 293] as also Ram and Shyam Company v. State of Haryana and Others - (1985) 3 SCC 267. 11. We have given our thoughtful consideration to the whole matter and have also perused the record of the case. 12. As regards the preliminary objection raised by Mr. Sudhir Gupta, learned counsel for the Revenue that the petitioner has got an alternative remedy and therefore, the writ petitions should be dismissed, we will like to observe that Titagurh Paper Mill's case (supra) arose after the order of assessment was passed by the Sales Tax Officer and it was observed by the Supreme Court that the petitioner should avail his right of appeal, provided under the Act, giving a complete machinery to challenge the assessment order and therefore, their Lordships did not like to interfere in their extraordinary j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been disputed by the Department that the Collector (Appeals) has decided the very point under issue in the present case, in favour of the petitioner on more than one occasions and the matter is still sub-judice before the Tribunal. Unless that order of the Collector (Appeals) is set aside or quashed, both the petitioner as well as the Department, are bound by the said decision of the Collector (Appeals), and therefore, it was in the fitness of things to have waited for decision of the Tribunal, and not to proceed with the proceedings in pursuance of the show cause notice. Giving of a notice u/s 11A can be validly justified on the ground that the Department wants to keep alive the issue because the matter cannot be re-opened u/s 11A after a period of six months from the relevant date, and therefore, the proper course for the Department would have been to issue notice but to stay their hands and not to proceed further in pursuance of the notice, specially when the petitioner had made a representation to the Department to wait for the decision of the Tribunal before proceeding further in pursuance of the show cause notice, and therefore, the relief that has been sought by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner has been regularly paying all its dues under the Act and has been complying with all the provisions of the Act and the Rules framed there under. The petitioner has been selling the manufactured goods at the factory gate as well as through its depots at Ahmedabad, Calcutta, Delhi, Indore, Nasirabad, Kundi, Ludhiana, Madras and Meera. It is not disputed that approximately the total sales took place at the factory gate and the remaining through various depots of the company. Excise duty is paid at the factory gate and thereafter, the goods are transported to the Depots and sold there. A demand-cum-show-cause notice (Annexure-1) was issued by the respondent No. 3 on 10-2-1989 wherein it was mentioned that the PVC Compound MBs were transferred to the different depots and further sold from there in respect of which Depot Service Charges and unloading charges have been shown in the invoice and were being charged from their customers by the Unit but the same were not included towards assessable value for the purpose of payment of central excise duty, which is necessary u/s 4 as the Depot Service Charges and unloading charges are recovered from the buyers for the services rendered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sole consideration for the sale : Provided that - (i) where in accordance with the normal practice of the wholesale trade in such goods, such goods are sold by the assessee at different prices to different classes of buyers (not being related persons) each such price, shall, subject to the existence of the other circumstances specified in clause (a), be deemed to be the normal price of such goods in relation to each such class of buyers; (ii) where such goods are sold by the assessee in the course of wholesale trade for delivery at the time and place of removal at a price fixed under any law for the time being in force, or at a price, being the maximum fixed under any such law, then, notwithstanding anything contained in clause (iii) of this proviso the price or the maximum price, as the case may be, so fixed, shall be in relation to the goods so sold, be deemed to be the normal price thereof; (iii) where the assessee so arranges that the goods are generally not sold by him in the course of wholesale trade except to or through a related person, the normal price of the goods sold by the assessee to or through such related person shall be deemed to be the price at which they ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11-A. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded. - (1) When any duty of excise has not been levied or paid or has been short-levied or erroneously refunded, a Central Excise Officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should pay the amount specified in the notice : Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of provisions of this Act or of the rules made there under with intent to evade payment of duty, by such person or his agent, the provisions of this sub-section shall have effect, as if for the words "Central Excise Officer", the words "Collector of Excise" and for the words 'six months', the words 'five years' were substituted. Explanation. - Where the service of the notice is stayed by an order of a Court, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell their manufactured goods at the factory gate and also from their depots, but their price at the depot were more than at the factory gate and they used to add delivery and collection charges etc. The Department's case was that this being additional charges should form part of the assessable value. Their Lordships of the Supreme Court have held in the Indian Oxygen Ltd. case (supra) that since the ex-factory price is ascertainable as such, the factory price shall be the basis for determination of value under Sec. 4 of the Act of 1944 and the question of transportation charges becomes irrelevant. Their Lordships have further held that the value u/s 4 is to be determined on the basis of wholesale price at which goods are sold at the factory gate (i.e. the place of removal) and therefore, the cost of transportation from factory gate to the place of delivery and transportation expenses cannot be added to wholesale price at factory gate because/the duty of excise is a tax on manufacture and not on the profits made on transportation charges. Their Lordships further held that delivery and collection charges have nothing to do with the manufacture as they are for delivery of full cylinde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Consequently where the sale is effected at the factory gate, expenses incurred by the assessee up to the date of delivery on account of storage charges, outward handling charges, interest on inventories, (stocks carried by the manufacturer after clearance), charges for other services after delivery to the buyer, namely after-sales service and marketing and selling organising expenses including advertisement expenses cannot be deducted. It will be noted that advertisement expenses cannot be deducted. It will be noted that the advertisement expenses, marketing and selling organisation expenses and after-sales service promote the marketability of the article and enter into its value in the trade. Where the sale in the course of wholesale trade is effected by the assessee through its sales organisation at a place or places outside the factory gate, the expenses incurred by the assessee up to the date of delivery under the aforesaid heads cannot, on the same grounds, be deducted. But the assessee will be entitled to a deduction on account of the cost of transportation of the excisable article from the factory gate to the place or places where it is sold. The cost of transportation wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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