Customs, Excise and Gold Tribunal - Delhi
Universal Luggage Mfg. Co. Ltd. vs Collector Of C. Ex. on 8 September, 1989
Equivalent citations: 1990ECR226(TRI.-DELHI), 1990(45)ELT508(TRI-DEL)
ORDER G.A. Brahma Deva, Member (J)
1. This appeal arises and directed against the Order No. V (48A) 15-59/Adj/86/30 dated Nil January, 1987 passed by the Collector of Central Excise and Customs, Pune.
2. The facts, in brief of the case, are that the appellants are manufacturers of Travel Goods such as suitcases, briefcases etc. in their factories at Bombay, Satara, Paithan & Waluj, all situated in the State of Maharashtra. The appellants-assessee manufacture Travel Bags of various sizes falling under erstwhile Tariff Item 48A of the Central Excises and Salt Act, 1944. Among them, certain bags which were 26" in size were provided with a special type of bracket at the bottom. These brackets are fitted to these bags at the assessee's factory. These brackets are provided for fixing of wheels to the suit cases to enable them to be carried easily from place to place. These wheel kits are not manufactured by them but are purchased after due payment of duty. These Wheel Kits are accounted separately and supplied to the Dealers and ultimately to the consumers/buyers, if and only if desired by them, according to the appellants. In view of the firm stand taken by the appellants, these Wheel Kits are an optional accessory as it was not fixed to the suitcases before leaving the factory premises and later on supplied in some cases as an optional accessory and not an integral part of the suitcase, the value of the wheel kits was not included in the assessable value of the suitcases. The Adjudicating Authority, i.e., Collector of Customs and Central Excise, Pune, in respect of Satara Unit factory of the appellants has initiated action for short-levy and demanded duty short-paid for non-inclusion of the value of the Wheel Kits in the assessable value of the suitcases and passed the impugned order whereby it was held that value of the Wheel Kits be added to the value of the suitcase and the assessable value of the suit cases be accordingly enhanced for payment of excise duty. Further, the appellants were asked to pay differential duty of Rs. 36,174.87 on clearance of goods (old stock) sold at the higher prices from Depots due to variation in prices. The appellants were fully dissatisfied with these two findings. Hence this appeal.
3. Shri M. Chandrasekharan, learned Counsel assisted by Shri K.M. Motasha and Shri Pradeep Jain, Advocates, appeared for the appellants and Department is represented by learned S.D.R., Shri V.K. Sharma.
4. Shri Chandrasekharan, learned Counsel, submitted that prima facie the impugned order suffers from illegality for want of jurisdiction due to the fact that the same issue was already adjudicated by the Assistant Collector who had the jurisdiction in respect of Satara Unit holding that the value of the Wheel Kits is not to be included in the assessable value of the suitcase and this order was challenged by the Department before the Collector (Appeals) who upheld the decision of the Assistant Collector holding that value of the Kits cannot be included and hence in view of this fact that Executive Collector, Pune is not competent to pass order in respect of the same matter which had been disposed of by the Collector (Appeals) and if he considered that the order of the Collector (Appeals) for any reason, is not legal or proper, the proper course for him would have been to file an appeal before the Appellate Tribunal under Section 35-B(2) as it was held in the case of Orient Paper Mills, Shahdol v. Collector of Central Excise, Bhubaneswar, reported in 1985 (19) E.L.T. 451, but, however, he requested this Tribunal to consider the case on merits as finality is required on the issue of inclusion of value of Wheel Kits in the assessable value to avoid divergent views between the Collectorates in whose jurisdiction the appellants' factories fall. He contended that the findings given by the Collector about the Wheel Kits "as an essential part of the suitcase and leads to marketability", is itself baseless as it is not based on any evidence. He urged that Wheel Kit is neither an integral part nor an essential part which leads to marketability as the product (suitcase) was completed and marketable without the Wheel Kit. He submitted that all the suitcases were cleared without Wheels. Even the suitcases over 26" having brackets were not sold with wheels even at branches. Out of 26" suitcases supplied to the dealers/consumers, Kitwheels were supplied if and only if, desired by them although 75% of 26" suitcases were supplied with Wheel Kits, only 10% out of that was accepted by the Customers and the Collector himself has admitted the fact that major sales of supplied suitcases with Kits only to the extent of 75% of the total manufactured of suit cases and 25% was not sold with Kits Wheel, that itself is clear proof to show that all the sales were not with Kitwheels and hence the Kit Wheels are neither essential nor integral part of the suitcase but it is only an optional accessory. Strong reliance was placed by the Counsel producing a copy of the Order No. V(48)15-36/Adj./87, dated October, 1987 passed by the other Executive Collector of Central Excise and Customs, Aurangabad in the very appellants' case in respect of the other Unit/Factory at Paithen District within territorial jurisdiction of Collector of Central Excise and Customs, Aurangabad wherein he has passed a considered order after making detailed enquiries holding that Wheel Kit is only optional depending upon the customer's choice and hence the value of this cannot be added on the similar facts and circumstances. In addition to this, he cited the series of decisions in support of his contention that Wheel Kits are not essential part of the suit case but are only accessories and the value of the accessory cannot be added to the assessable value of the product.
5. As regards other issue selling the goods cleared on the basis pf earlier approved classification list which was sold subsequently by Depot at higher price on account of upward revision, learned Advocate submitted that no differential duty can be charged in respect of the cleared goods as time and place of clearance at the time of removal was relevant for the purpose of levy of duty. In view of the definition of the place of removal for clearance of goods and particularly it was cleared after the payment of duty subsequent uptrend and downtrend is immaterial for the purpose of determining the duty and in support of this contention he cited a number of decisions and particularly he brought to our notice a decision reported in 1986 (25) E.L.T. 69 in the case of lndo Hacks Ltd. v. Collector of Central Excise, Hyderabad, where this Tribunal has held that once the correct assessable value has been declared by the assessee and the goods cleared by the factory, any subsequent reduction in prices to boost the sale of goods cannot be a matter of concern for the Central Excise in determining the correct assessable value of even for determining the valuation for the purposes of claiming exemption. He further submitted that if this trend is allowed then there will be a series of cases for claiming refund and deduction when the price of the cleared goods comes down. Hence neither it is the intention nor the scope of the Legislature as specified under Section 4 of the Act.
6. Shri V.K. Sharma, learned S.D.R. appearing for the Department, reiterated the points which the Adjudicating Authority has adjudicated and submitted that the order is justified as Wheel Kit is a part of the suit case and its value is to be added, and also justified levy of differential duty which has taken place due to variation in prices.
7. We have anxiously considered the arguments advanced by both sides. Although the learned Counsel for the appellants pointed out the issue of jurisdiction but neither he pressed it further nor he produced sufficient material for our consideration.
Hence, we are left with only two issues for determination in this case which are as follows :-
(1) Whether the value of Wheel Kits has to be added to the value of the suit case;
(2) Whether the differential duty has to be recovered in respect of old stock due to revision of price at the higher side;
8. As regards the first issue, on factual position it is clear that although by and large all the 26" suit cases were provided with special type of brackets for fixing wheels, wheels were supplied to some percentage of suit cases only and not to all as admitted by the Adjudicating Authority. In view of this, it is clear that Wheel Kit was not an integral part of the suit cases but only optional accessory. In this regard, in respect of the other unit of the appellants, the other Executive Collector has passed an order after considering all the facts and circumstances which are similar to in every respect of this unit and he has given a clear finding that supply of Wheel Kits is not an integral part of the suit case but only an optional accessory. So in view of this clear findings of the Collector of Central Excise and Customs, Aurangabad on similar facts and circumstances and the same view was taken previously by the two Assistant Collectors of this very Unit and the same was upheld by the Appellate Collector, the Appellants' contention is well founded based on facts and legal position and accordingly, Wheel Kit is only an accessory and cannot be treated as a part of the product for the purpose of assessable value. Appellant's counsel cited series of decisions regarding exclusion of the value of the accessories and with utmost respect to all decisions, we would like to consider only few for the sake of convenience and brevity.
In the case of State of Mysore v. M/s. Kores (India) Ltd. (26 S.T.C. 87) the then High Court of Mysore has taken a view that typewriter ribbon is not an essential part of a typewriter but it is an accessory and not a part of the typewriter (unlike spool) though it may not be possible to type out any matter without it. While considering for the purpose of aggregation of turnover under Sales-tax Act, the same view was accepted by the Supreme Court in the case of State of Uttar Pradesh v. M/s. Kores (India) Ltd. (AIR 1977 S.C. 132). In the case of International Tractor Co. of India Ltd. v. Union of India and Ors., reported in 1977 (1) E.L.T. (J 133), Bombay High Court while considering the assessable value of the manufactured Tractors under Section 4 of the Central Excises and Salt Act, 1944, has given a ruling stating that hour metres and Wheel weights are not essential parts of the tractors. As such, it is accessories though fitted to the tractor at the option of the customer before leaving the licensed premises, its value cannot be included in the assessable value of the tractor. In the case of T.I. Miller Ltd. v. Union of India, reported in 1987 (31) E.L.T. 344 (Bom.), Bombay High Court has taken a view that Cycle could function without a dynamo and therefore, dynamo is not part but accessory.
9. Following the analogy of the cases cited above and on facts, it is clear in this case that Wheel Kits is only an accessory and, however, it may be convenient or add to the beauty or otherwise the value of the Kit-wheeler cannot be added to the assessable value of the suit case. Accordingly, the appellants succeed on this point.
10. As regards second issue, it is very well settled principle of law that when once goods were approved and cleared from the place of removal after considering the place and time of their removal, the same goods could not be subject to levy duty on assessable value at the subsequent stage irrespective of variation in prices. Section 4(3) (b) of the Central Excises and Salt Act, defines the place of removal which includes a factory or any other place or premises of production or manufacture of the excisable goods and accordingly, the goods cleared from factory on payment of duty could not be subject to tax for difference when it was sold subsequently at Depot. We fully concur with the arguments advanced by the appellants' counsel on this point. Hence, the appellants succeed on the Second point also.
11. In the result, we set aside the impugned order by answering the above two issues in favour of the appellants and accordingly, the appeal is allowed.