Customs, Excise and Gold Tribunal - Delhi
Indian Explosives Ltd. vs Collector Of Central Excise on 14 August, 1995
Equivalent citations: 1996(82)ELT270(TRI-DEL)
ORDER K.S. Venkataramani, Member (T)
1. This appeal is directed against the order dated 22-8-1983 passed by the Collector of Central Excise (Appeals), New Delhi. The appellants herein manufactured Chemical Fertilisers excisable at the relevant time under the old Central Excise Tariff Item 14HH. The appellants submitted price list during the period June 1974 to September, 1975 which is material to this appeal. They claimed deduction of various post-manufacturing expenses including exemption permissible under Notification No. 108/74 on Fertiliser Pool Equalisation Charge (FPEC). The jurisdictional Assistant Collector initially approved the price list without granting any deduction on account of post-manufacturing charge as also trade discount and the FPEC. The appellants went in appeal against this order. The Appellate Collector in his Order No. 2226 to 2228/76, dated 25-10-1976 passed a common order in which inter alia on the issue of FPEC exemption, the Appellate Collector agreed with the method adopted by the appellants and further explained in his order the manner in which it was to be operated. He also remanded the case back to the Assistant Collector on certain other issue regarding deduction from the assessable value. In the de novo proceedings, the Assistant Collector passed order on 6-7-1978 in which with regard to the FPEC exemption, the Assistant Collector allowed the abatment of the full amount of FPEC from the wholesale cash price and then calculated the duty payable. The appellants again went in appeal before the Collector (Appeals) against this order of the Assistant Collector. The Collector (Appeals) passed the impugned order thereafter, wherein in regard to FPEC he agreed that the method adopted by the Assistant Collector was without authority of law because the exemption granted under the notification was equivalent to the duty on the amount of FPEC and did not permit a deduction of the FPEC itself. The Collector (Appeals) at the same time held that the appellants' claim based on the earlier orders of the Appellate Collector was also wrong and the Collector (Appeals) observed that what had to be reduced from the wholesale price inclusive of duty was not the FPEC paid by the appellants but the duty of such FPEC and that the net duty payable to the Department plus the assessable value should be equal to the wholesale price inclusive of the FPEC and duty. The present appeal is against this decision of the Collector (Appeals).
2. The learned Chartered Accountant Shri S. Madhavan appearing for the appellants submitted that the Collector (Appeals) has gone wrong in failing to appreciate that neither the Assistant Collector nor the Collector (Appeals) was competent to assume jurisdiction to pass any fresh order on an aspect on which the previous Appellate Collector had already passed specific and final order in the matter to allowing the exemption on the value of FPEC in his Order No. 2226 to 2228/76, dated 25-10-1976. In this order, the learned Chartered Accountant pointed out that the Appellate Collector had remanded only the matter of admissible deduction back to the Assistant Collector for de novo exemption and the Appellate Collector had given no such direction to the Assistant Collector with regard to the exemption of duty claimed under Notification No. 108/74. The Appellate Collector in fact had agreed with the contention of the appellant and had passed clear order illustrated by an example. The learned Counsel urged that such an order of the Appellate Collector in the absence of any appeal from the Department had become final and binding on the authority and in such a context, the Assistant Collector in readjudicating the matter relating to FPEC exemption acted beyond jurisdiction. It was contended that the Collector (Appeals) should also have refrained from passing any order himself on the price list on a question relating to an issue where a competent authority of equal rank had passed final order which has not been appealed against, annulled or modified by a higher authority. The learned Counsel, in this context, cited and relied upon the series of case law including Himachal Steel Kandrori v. Collector of Central Excise, Chandigarh, reported in 1988 (37) E.L.T. 291 (Tribunal) and Union of India v. Kamlakshi Finance Corporation Ltd., reported in 1991 (55) E.L.T. 433 (S.C.). On the merits of the claim for exemption under Notification No. 108/74, the learned Counsel contended that the case pertaining for the period earlier to October, 1975 and was governed by old Section 4 of the Central Excises and Salt Act, 1944 prior to its amendment. The learned Chartered Accountant submitted that the Collector (Appeals) went wrong in relying on the Explanation below Section 4(4)(d)(ii) as inserted by the Finance Act, 1982. The Collector (Appeals) should have first determined the assessable value and appropriate duty payable and should have then reduced this duty by the amount equivalent to duty of FPEC as prescribed in Central Excise Tariff Schedule. The learned Chartered Accountant pointed out that there is a decision of Government of India on this very notification in its Order in Review No. 248 of 1978 dated 30-3-1979 a copy of which is in the paper book. In this order, the Government of India has held in the same manner as has been done by the Appellate Collector earlier in his order dated 25-10-1976 in working out the exemption under the Notification No. 108/74. The learned Counsel further relied upon the Delhi High Court decision in the case of I.T.C. Ltd. and Anr. v. Union of India and Ors., reported in 1987 (30) E.L.T. 321 (Delhi) wherein the High Court had gone into various aspects of valuation under Section 4 of Central Excise Act and had held that Section 4 of the Act and exemption notification had to be given effect separately one after the other. First under Section 4, the Excise duty payable had to be determined with reference to the rates of duty prescribed in Schedule which necessitated the determination of the assessable value. After this, as a second step the exemption notification was to be applied. The learned Chartered Accountant in this regard also drew support from the Supreme Court decision in the case of Bata Shoe Company (P) Ltd. v. Collector of Central Excise, reported in 1985 (21) E.L.T. 9, wherein the Supreme Court held, Excise duty leviable is not taken into account while determining the value of goods under an exemption notification.
3. Shri A.K. Singhal, the learned Departmental Representative submitted that a perusal of the earlier orders of the Assistant Collector approving the assessable value and the earlier order of the Appellate Collector dated 25-10-1976 read together would show that the Appellate Collector order is not final in respect of FPEC exemption also. It mainly dealt with the various claims for deduction from the assessable value and on this issue it has been remanded to the Assistant Collector. Therefore, there was no infirmity in the Assistant Collector's order once again going into the aspect of FPEC exemption. In such a situation, the present impugned order of the Collector (Appeals) does not suffer from any infirmity according to the learned Departmental Representative. The issue here, pointed out the learned Departmental Representative, is not one of applying the tariff rate or effective rate of duty but a method of arriving at the assessable value from cum-duty price or wholesale price. In this context, the formula laid down by Collector (Appeals) in the present impugned order correctly sets out the position in law. The learned Departmental Representative further contended that the issue now stands settled by the recent decision of the Supreme Court in the case of Union of India v. M.R.F. Ltd. reported in 1995 {77) E.L.T. 433. The learned Departmental Representative relied upon the observation of the Supreme Court in para-67 of that order. The Supreme Court had held that permissible deductions are to be first reduced from the cum-duty price while arriving at the assessable value. The case law on the subject cited by the appellants does not cover the present situation.
4. The submissions made by both the parties have been carefully considered. Taking up the contention of the appellants that the Collector (Appeals) in present impugned order could not in law have overruled the earlier order of the Appellate Collector, we find a lot of force in this argument. In his Order No. 2226 to 2228/76, dated 25-10-1976, that authority had held that the amount pool equalisation fund contribution 'as given in Column 3 of Notification No. 108/74 is not a permissible deduction from the value of the goods arrived at under Section 4 of Central Excises and Salt Act, but it is the duty of excise leviable on the pool equalisation fund which has to be deducted from the duty on the assessable value. The Appellate Collector further observed that in his order the Assistant Collector had permitted the deduction of 15% of the FPEC from the duty calculated on the assessable value and the Appellate Collector held this method adopted by the Assistant Collector as the correct one. So there is an endorsement by the Appellate Collector of the method of calculation of the exemption already adopted by the Assistant Collector in working out exemption under the Notification No. 108/74. Therefore, the question of this issue being reopened in the de novo proceedings by the Assistant Collector is not called for at all since clearly it was not within the terms of remand. The Collector (Appeals) in the present impugned order has however observed "as regards the question of deduction of duty on FPEC under Notification No. 108/74 the method adopted by Assistant Collector as extracted above on the face of it appears to be without authority inasmuch as the exemption under Notification No. 108/74 is equivalent to duty on FPEC and not a deduction of FPEC themselves. However, the method of calculation claimed by the appellant on the strength of the earlier orders of the Collector (Appeals) (Order-in-Appeal No. 2226 to 2228/76, dated 25-10-1976) is also not correct". The Collector (Appeals) has then proceeded to give his method of calculation. But it should be noted that what was before the Collector (Appeals) the impugned order was a de novo adjudication by Assistant Collector in terms of the earlier order of the Appellate Collector dated 25-10-1976 and the perusal of the Appellate Collector's remand order would clearly show as already noted above that method of calculation of exemption under Notification No. 108/74 was concluded in that order and was not an issue remanded to Assistant Collector for redetermination. In such a context, when admittedly there was no review application against the earlier orders of Collector (Appeals) it will not be correct for another Collector (Appeals) to pronounce the method approved earlier by Appellate Collector as incorrect, and proceed to lay down his own formula. The appellants have rightly cited and relied upon the Tribunal decision in the case of Himachal Steel Kandrori v. Collector of Central Excise, Chandigarh, reported in 1988 (37) E.L.T. 291 (Tribunal) wherein the Tribunal held in Para-6 as follows :-
6. I have considered the arguments and the case law cited by the learned counsel for the appellants. It is admitted to the respondent that the earlier adjudication order, dated 23-8-1979 holding a part of the refund claim as time-barred was set aside by the Collector (Appeals) vide his Order dated 18-11-1982 expressly holding that "the claim has to be treated in time". It is further admitted to the respondent that no appeal was filed against that Order of the Collector (Appeals) which held the claim as within time, by the department. Thus in my opinion the said Order of the Collector (Appeals) dated 18-11-1982 holding the refund claim within time whether right or wrong became final and cannot be raised again in readjudication as held by this Tribunal in the case of Kerala State Detergents and Chemicals Ltd. v. Collector, supra. The observations of the Assistant Collector in his readjudication Order dated 7-1-1985 that the said Order dated 18-11-1982 passed by the Collector (Appeals) in fact directed him to examine the claim and pass necessary order is partly correct. But it is settled law that Order of the Appellate Authority is to be read as a whole and not in part. From a perusal of the said Order dated 18-11-1982 of the Collector (Appeals) it would appear that the only issue before him was as to whether the Assistant Collector was right in rejecting the part of the claim of the appellants as time-barred and the learned Collector after examining the facts and the case law cited by the appellants expressly recorded a finding that the claim has to be treated in time. And after holding so directed the Assistant Collector to examine the claim on merits and passed necessary orders but it is unfortunate that the Assistant Collector overlooked the said expressed findings recorded by the Collector (Appeals) in his Order dated 18-11-1982. that the claim was within time and quoted the last sentence of the said Order whereby the Collector (Appeals) directed him to examine the claim on merits and pass necessary orders. Forgetting further that he cannot reconsider the question which has already been decided by the Collector (Appeals) (See Hasmukhlal Amritlal Mehta v. N.B. Sonavene, (supra) and then as a result of the Order of the Collector (Appeals) the entire matter before him was not at large and he was not free to decide the case in his own way and also to decide the question of limitation again (See Scientific Instruments Company Ltd. v. Collector of Customs, (supra). In a nutshell, he was bound by the Order dated 18-11-1982 passed by the Collector (Appeals) holding that the claim was within time. It is again unfortunate that while deciding the appeal filed by the appellants against the readjudication order dated 7-1-1985 the Collector (Appeals) also failed to take note of the earlier Order passed by his predecessor on 18-11-1982 which was referred to in the readjudication order passed by the Assistant Collector inasmuch as he was very much bound by the earlier Order passed by his predecessor in the instant case which was admittedly never reviewed or challenged in appeal by the department. Under these circumstances. I have no hesitation in holding that the impugned order holding the claim of the appellants as time-barred is without jurisdiction and therefore it cannot be allowed to stay even for a moment.
Therefore, the findings on this aspect in the impugned order of Collector (Appeals) being invalid in law and without jurisdiction are not tenable and it is held accordingly.
5. Even on merits it cannot be said that the method of calculation adopted/approved by the Appellate Collector is at variance with provisions of Section 4 of Central Excises and Salt Act, 1944 prior to its amendment which is relevant to this Appeal. The Notification No. 108/74 reads as follows :-
"In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts fertilisers of the description specified in column (2) of the Table below falling under Item No. 14HH of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), from so much of the duty of excise leviable thereon as is equivalent to the duty calculated on the value specified in the corresponding entries in column (3) of the said Table.
TABLE ____________________________________________________________________________ S. No. Description Value per metric tonne ____________________________________________________________________________
2. The exemption contained in this notification shall apply only to a manufacturer who, before clearing the fertiliser specified in column (2) of the Table, undertakes to credit the amount specified in the corresponding entry in column (3) of the said Table into the Fertiliser Pool Equalisation Fund in accordance with the directions issued by the Central Government, and produces, within sixty days of the date of clearance of the said fertiliser, sufficient proof to the satisfaction of the proper officer that the amount has been so credited.
3. Nothing contained in this notification shall apply to any of the fertilisers, specified in the said Table, which is imported into India."
This very notification came up for interpretation before the Government of India in its order in review No. 248 of 1979 in respect of an order passed by Appellate Collector of Central Excise, New Delhi in the case of Shriram Fertilizers & Chemicals Ltd. It was held that the Assistant Collector was bound first to work out the duty as would be leviable i.e. ex-factory wholesale price as if the amount of FPEC was not paid and, thereafter on being satisfied that it has been so deposited by the manufacturer as per the stipulated undertaking, the Assistant Collector was then to deduct the duty on the FPEC (on Rs. 610 @ 15% = Rs. 91.50) from the duty worked out earlier. It is now well settled that such interpretation by the Government of India has to be given due weight as it is in the nature of contemporaneous exposition. See Supreme Court decision in the case of C.C.E. Guntur v. Andhra Sugar Ltd. - 1989 (19) E.C.C. 46. Such an interpretation in terms of Section 4 of Central Excises and Salt Act prior to its amendment finds support in the Delhi High Court decision in the case of ITC v. Union of India reported in 1987 (30) E.L.T. 321. Para-10 of that decision runs as follows :-
Para-10 " The ratio of the above decision was clear. On their interpretation, Section 4 of the Act and the notification had to be given effect to separately, one after the other. First, under Section 4, the excise duty payable or leviable had first to be determined with reference to the rates of duty prescribed in the Schedule. This process necessarily involved a determination of the assessable value as a first step in the determination of duty. After this, as a second step, the notification of exemption was to be applied which directed that a part of the excise duty so computed as payable or leviable should be exempted. The ultimate effect of this, no doubt, was that the "effective duty" payable becomes less and if the assessable value were to be recomputed on the basis of such effective duty, it will be larger than the assessable value taken at the first state of computation. But there was nothing in the statute or notification which spelt out or justified a repetition of this process of determination of the assessable value (which had already been gone through) after the notification has been given effect to. There was no justification to read Section 4 and the notification as dovetailing into each other, to consider the effective duty payable as the excise duty 'payable' within the meaning of Section 4(4)(d) and to determine the assessable value and the excise duty payable as if a reduced rate of duty for these goods had been enacted in the First Schedule itself".
Again on Section 4 unamended the Supreme Court judgment in the case of Bata Shoe Co. v. Collector of Central Excise, 1985 (21) E.L.T. 9 is also relevant wherein the Supreme Court held that before the question of availability of exemption under a notification of goods leviable to duty ad valorem, the first essential step is to determine the value of the article in the manner prescribed in Section 4 of the Act. The Court observed that the fact that on such a computation, the article may ultimately be found to be exempted from excise duty (as was the result in that case) does not have any bearing on the question of applicability of Section 4 of the Act for determining its 'value' for the purposes of duty. The expression 'for the purposes of duty' occurring in Section 4, the court held, has a wide import. The recent Supreme Court decision in MRF case (supra) is more on deduction in assessable value of duty under Section 4(4)(d)(ii) whereas here it is on the working out the assessable value to give effect to exemption Notification 108/74. It is, therefore, found, on a consideration of the scope of Section 4 of Central Excises and Salt Act as it existed at the relevant time, and the judicial interpretation thereof, as well as Government of India's own understanding of the provisions of that Section with reference to the very same Notification No. 108/74, that the method adopted by the Appellate Collector in his earlier order dated 25-10-1976 is in order and needs no modification. Even otherwise, the present impugned order of Collector (Appeals), we have found is not sustainable on grounds of lack of jurisdiction. In the result, the appeal is allowed.