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TMI Blog1993 (3) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... s and at the rates set forth in the Schedule to the Central Excise Tariff Act, 1985 (hereinafter referred to as 'the 1985 Act'). By virtue of the powers conferred by Rule 8(1) of the Central Excise Rules, 1944 (hereinafter called 'the 1944 Rules'), the Central Government has been issuing notifications from time to time exempting from the payment of excise duty on all footwears value whereof did not exceed the specified amount. By notification dated July 24, 1967, the aforesaid value was not to exceed Rs. 5/- per pair of footwear to claim exemption from whole of the duty of excise. The aforesaid limit was subsequently increased to Rs. 15/- on March 16, 1979, Rs. 30/- on February 28, 1982, Rs. 45/-on February 12, 1986 and Rs. 60/- by Notification No. 89/87-C.E., dated March 1, 1987. 2. In implementation of Notification No. 171/67-C.E., dated July 24, 1967, the Assessing Authorities took the view that while determining value of the footwears for the purposes of granting exemption from the wholesale price indicated the amount of excise duty was not to be deducted and in this manner the value determined would be more than the minimum value mentioned in the notification and the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Supreme Court aforesaid that the matter was again taken up by the Assistant Collector of Central Excise by issuing the impugned notice dated November 7, 1988, raising demand of excise duty on such like footwears with respect to applicability of Notification No. 49/86-C.E., as amended by Notification No. 89/87-C.E., dated February 12, 1986 and March 1, 1987, respectively fixing value of the footwears at Rs. 45/- and Rs. 60/- respectively for the purposes of claiming exemption from excise duty. 4. The contention of the learned counsel for the petitioner is that in view of the decision of the Supreme Court in Bata Shoe Co. (P) Ltd.. v. Collector of Central Excise, Patna and Others, A.I.R. 1985 Supreme Court 1070, for the purposes of determining value of the footwears manufactured by the petitioner in order to see whether the same are exempted from excise duty under the relevant notification, the petitioner-assessee is entitled to deduct from the wholesale price of the footwear chargeable at the time of the footwears being delivered at factory gate (i) trade discount, (ii) excise duty, (iii) packing charges and (iv) transport expenses. It is only such deemed value which is to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 3; (v) On a proper interpretation of the definition of 'related person' in sub-section (4)(c) of Section 4, the words "a relative and a distributor of the assessee" do not refer to any distributor who is a relative of the assessee within the meaning of the Companies Act, 1956. So read, the definition of 'related person' is not unduly wide and does not suffer from any constitutional infirmity. It is within the legislative competence of Parliament. It is only when an assessee so "arranges that the goods are generally not sold by him in the course of wholesale trade except to or through such a related person that the price at which the goods are ordinarily sold by the related person in the course of wholesale trade at the time of removal to dealers (not being related persons) or where such goods are not sold to such dealers, to dealers (being related persons) who sell such goods in retail is liable to be taken as the excisable value of the goods under proviso (iii) to sub-section (1)(a) of Section 4." 6. While determining the value of the excisable articles and the deductions made therefrom in respect of post manufacturing expenses the position of law was laid down in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o value which could not be ascertained either under the old provision or under the new provision it was observed as under :- "Where the price contemplated under the old Section 4(a) or under the new Section 4(1)(a) is not ascertainable, the price is determined under the old Section 4(b) or the new Section 4(1)(b). Now, the price of an article is related to its value (using this term in a general sense) and into that value have poured several components, including those which have enriched its value and given to the article its marketability in the trade. Therefore, the expenses incurred on account of the several factors which have contributed to its value upto the date of sale, which apparently would be the date of delivery, are liable to be included. Consequently, where the sale is effected at the factory gate, expenses incurred by the assessee upto 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 service after delivery to the buyer, namely after-sales service and marketing and selling organisation expenses including advertisement expenses cannot be deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xxx xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx Further elaborating in the order - Annexure P. 7 it was observed as under :- "This extra amount collected by the party becomes part of the assessable value and after adding this amount in 'Value' already fixed under Section 4 of the Act, if the value exceeds the permissible limits as given in the exemption Notification, the article no longer remains exempted under the said Notification and the duty is chargeable." ---------------------------------- ---------------------------------- P. 14 It was further observed :- "The effective duty actually chargeable or payable alone should be excluded from the cum 'value' what is chargeable is only the real or actual excise chargeable under the Act on such goods. In other words, only the duty as reduced and actually paid on the manufactured goods should be excluded in determining the assessable value of such manufactured goods. In cases of exemption only the actual or real duty paid by the assessee should alone be excluded and not the duty hypothetically chargeable under the Act. The point may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urer is not to pocket the excise duty which has been charged by him from the consumer. There is fallacy in the stand of the department. The petitioner has not charged excise duty from the customers credit of which is being claimed as an exemption from the payment of excise duty. As would be seen from the ratio of the decisions of the Supreme Court referred to above the excise duty is payable on the value of the goods primarily at the time when they are to leave the factory. If at that stage the value is fixed for being sold to wholesale dealers or a subsequent stage at the premises of the wholesale dealers the element of excise duty and treating account and transport charges of taking the goods from the factory gate to the premises of the wholesale dealer are to be excluded therefrom for determining notional value of the article leaving the gate of the factory premises for the purpose of either charging of excise duty or exemption therefrom. The view of the department that the dealer had charged the excise duty while showing the element of excise duty in the statements is not to be taken into consideration while fixing notional value to be fixed as required under Section 4 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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