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TMI Blog2005 (3) TMI 344X X X X Extracts X X X X X X X X Extracts X X X X ..... tly, the appellant is known as Hyderabad Unit of Voltas Ltd. During the relevant period, the appellants were selling the refrigerators at their factory gate to dealers. They were also stock transferring the goods to their Area Sale Offices (ASO) in various places in the country on payment of duty at the factory gate price for sales to dealers. While selling their goods in their area sales offices, the appellants added the transport cost, the inventory cost, the establishment costs at the depot to the ex-factory price. In addition to the above, the taxes payable at the area sales offices were also charged to the dealers. This practice is adopted by the appellants since 1975. The appellants filed price lists in Part I under Section 4(1)(a) of the Act, declaring the price at which the refrigerators to be sold at the factory gate. These price lists have been duly approved. The Department conducted investigations and issued show cause notice to the appellants alleging that the appellants had wrongly applied the factory gate sales price of refrigerators to the goods stock transferred to the area sales offices and sold through the said offices to dealers situated in other parts of the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (e) The dealers in other states therefore cannot purchase at the factory gate. With regard to the above grounds, the learned Advocate submitted that the quantum of sales made to the dealers at factory gate is irrelevant to decide the genuineness. Since the Department does not demand duty on the clearance made at the factory gate, the price at factory gate is accepted as genuine by the Department. The fact that a particular model is not sold at the factory gate cannot dislodge the fact of a factory gate price being available for the same goods. Reliance is placed on the decision of the Supreme Court in the case of A.K. Roy v. Voltas Ltd. [I977 (1) E.L.T. (J 177) (S.C.)]. The sales made at the factory gate cannot be considered as retail sales as the dealers in Telangana have purchased the goods and have further sold them. Hence, they cannot be considered as retail sales. The averments of the dealers in Telangana in the statement recorded by the Department that they cannot sell the goods in other regions represent only a commercial practice where a dealer of one region is advised not to sell in other areas to avoid conflict with the dealers in other areas. From the stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on records. This distinction has been noted by the Tribunal in the case of TELCO Ltd. referred to earlier. Similarly in the case of Bharat Aluminium Co. [2003 (162) E.L.T. 351 (T) = 2003 (58) RLT 369], the Tribunal has rejected in similar circumstances, the reliance on the Larger Bench decision. The decision of the Apex Court in this case of GOI v. MRF [1995 (77) E.L.T. 433 (S.C.) would not apply in this case since in that case it was a clear case of sale to different classes of buyers namely, the dealers and the Government whereas in the present case, all the sales are made to the dealers only. (v) The Board Circular No. 3/90-CX. 1, dated 25-1-1990 has clearly stated that in the case of regional sales depots, there was only a transfer of goods and there was no question of sales. Therefore, the Board has clarified that the factory gate price would apply, provided it is a genuine price. The Board has further clarified that the wholesale dealers in India cannot be considered as belonging to different classes simply because they are located in different places. The above circular has been taken note of in the case of Bharat Aluminium Co. Ltd. (supra). Since the Board has ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely covered by the decision of the Tribunal in the case of CCE, Chandigarh v. Taparia Tools Ltd. [2001 (131) E.L.T. 306 (Tri. - L.B.)] wherein it was held that the wholesale buyers at factory gate and wholesale buyers from depot constitute separate classes of buyers. He said that the appellants filed price lists in Part I only. Even though the sales at the factory gate were very few compared to the sales at the regional sales offices, the appellant had moral responsibility to have filed a price lists in Part VII in respect of the sales from the area sales offices. Since they have not done it, there is clear evidence of suppression of facts, hence there is very justification in invoking the longer period. With regard to the binding nature of the Board's Circular of 1990, the learned SDR urged by citing several case laws that when there is a conflict between the law and the Board Circular, the law would prevail as per the Supreme Court decisions. He said that the instructions issued by the Board have to be within the four corners of the Act. He relied on the following case laws :- (a) M/s. Pahwa Chemicals Pvt. Ltd. v. CCE, New Delhi [2005 (181) E.L.T. 339 (S.C.) = 2005-TIOL- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that - (i) where, in accordance with the normal practice of 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 normal price of such goods in relation to each such class of buyers. (ii) ....... (iii) ........" In this case, in spite of the restrictions, the factory gate price is available. The Revenue has not demanded any differential duty in respect of the factory gate sales. In these circumstances, it is very clear that Section 4(1)(a) exists. If Section 4(1)(a) price exists, that should be the assessable value. The case laws cited by the learned Advocate are quite relevant. There is no need to go to proviso. Proviso 4(1)(a)(i) will come into effect under the following circumstances :- (a) There should be a normal practice of sales of goods at different prices to different classes of buyers. (b) The other circumstances satisfy in Section 4(1)(a) should exist. When all the above conditions are fulfilled, proviso (1) will apply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n up as basis of charging duty. It is also noticed that on the date of issue of adjudication order, the Board's clarification was already therein. Since the Department had full knowledge of the marketing pattern, there are no grounds to invoke the longer period. M/s. Taparia Tool Ltd. case (supra) which appears to be favourable to the Revenue has been distinct in the case of TELCO Ltd. (supra). It has been held in the above mentioned case, that the decision in the case of M/s. Taparia Tool Ltd. did not lay down as a principle that dealers buying from the depot manufacturers and dealers buying from the factory gate are to be treated as different classes of buyers. M/s. TELCO Ltd. decision relies on the clarification issued by the Board in circular dated 25-1-1990. It is also seen that the difference in price at the area sales office and the factory gate is on account of freight, insurance, depot expenses, etc. All these prices during the relevant period were not includible in the assessable value and also in view of the legal position existing at that time. Once the factory gate price is available, the same should be the assessable value. 6. In view of the above observations, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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