Customs, Excise and Gold Tribunal - Delhi
Associated Pigments Ltd. vs Collector Of Central Excise on 16 November, 1988
Equivalent citations: 1989(20)ECR163(TRI.-DELHI), 1989(40)ELT186(TRI-DEL)
ORDER Harish Chander, Member (J)
1. M/s Associated Pigments Ltd., Calcutta had filed an appeal being aggrieved from order-in-appeal No. 297/Cal-II/85 dated the 3rd day of January, 1986 passed by the Collector of Central Excise (Appeals), Calcutta.
2. The brief facts of the case are that the appellants are manufacturing Red lead, white lead and Zinc Oxide falling under Tariff Item 14 and lead sub-oxide and litharge falling under Tariff Item 68 of Central Excise Tariff. The appellants sell their products in the course of wholesale trade from their sales office/depots situated at Calcutta, Delhi, Bangalore and Kanpur. The prices charged by the appellants from their customers include, inter alia, the price of the goods, the cost of transportation from the factory gate to the depots and from the depots to the customers' place, transit insurance, octroi and taxes and duties including local taxes etc. The appellants originally submitted two price lists in Part-I dated 18-7-79 effective from 20-7-79 showing different prices for different zones and after claiming deductions on account of freight secondary packing charges, post manufacturing cost, selling profit, trade discounts etc. The Assistant Collector approved the assessable value in respect of the goods mentioned in the price list at higher rates after disallowing some claims vide his order No. 4/82 dated 16-8-1982. The appellants, not being satisfied with the order of the Assistant Collector, filed a Writ Petition under CR No. 11876 of 1982 before the Hon'ble High Court at Calcutta and obtained a Rule against that. The Hon'ble High Court, Calcutta vacated the order on 13-7-1984 with the direction to assess the excise duty for the period, which is the subject matter of the writ petition, in the light of the decision of the Hon'ble Supreme Court in the case of Union of India v. Bombay Tyres International Ltd. reported in 1983 ELT 1896 (SC) after giving the appellants a notice with at least five weeks time. The Superintendent of Central Excise, Range vide his letter dated 30-8-84 desired the appellants to file revised price lists. Accordingly, revised price lists in Part I for both their goods under Tariff Item 68 and Tariff Item 14 effective from 20-7-79 were filed on 26-12-84. In the price lists, the appellants furnished the wholesale prices for both Tariff Item 68 and Tariff Item 14 goods for their sales through sales depots at Calcutta, Delhi, Kanpur and Bangalore claiming deduction from value against discount not refundable on any account, freights, turnover tax, purchase tax, octroi duty etc. As per the above said judgment, statements of their sales from Delhi, Kanpur and Bangalore depot were also furnished. The Superintendent of Central Excise issued a Show Cause Notice dated 7-1-85 asking the appellants to show cause as to why their claims on account of trade discount, freight, octroi, turnover tax, purchase tax, etc. should not be disallowed. A reply to the Show Cause Notice was submitted. The Assistant Collector of Central Excise, Khardah determined and approved the assessable value of the respective items of products falling under Tariff Item 68 and Tariff Item 14 in revised price lists effective from 20-7-79 to 14-5-80, vide his order dated 7-6-85. Being aggrieved from the order passed by the Assistant Collector, the appellant had filed an appeal before the Appellate Collector of Central Excise. The learned Appellate Collector of Central Excise confirmed the findings of the Assistant Collector and rejected the appeal. Being aggrieved from the aforesaid order, the appellants have come in appeal before the Tribunal.
3. Shri J.S. Aggarwal, the learned advocate, has appeared on behalf of the appellants and has reiterated the facts. He has referred to the order-in-original and the order-in-appeal. He has stated that the dispute is in respect of the following items :-
(i) Freight
(ii) Delivery charges
(iii) Octroi
(iv) Turnover tax
(v) Purchase tax The appellants' factory is located at Calcutta and the depots at Delhi, Calcutta, Kanpur and Bangalore and the basic ex-depot price is the same. The prices differed in each zone on account of taxes for delivery charges. Octroi and purchase tax. He has further stated that the order-in-original was passed on the basis of some verification and copies of the same were not given to the appellants. He has stated that in view of the judgment of the Hon'ble Supreme Court in the case of Assistant Collector of Central Excise and Ors. v. Madras Rubber Factory Ltd. and Ors. reported in 1987 (27) ELT 553 (SC), deductions on account of octroi, transport and equalised freight have to be allowed and the appellants press for the deductions on account of freight from factory to Calcutta depot, delivery charges i.e. unloading charges after the factory gate and the appellants want a finding in this regard. For Zinc Oxide and lead oxide the turnover tax has been challenged by the appellants which is pending in the court of law. He has stated that unloading charges have to be allowed and the purchase tax in the present matter is the tax on sale of finished goods which are sold outside the West Bengal State vide West Bengal Taxation Act, 1979. He has pleaded that the same should be allowed. He has referred to a Tribunal judgment in the case of Castrol reported in 1987 (29) E.L.T. 585 (Tri.). Shri Aggarwal has pleaded for the acceptance of the appeal.
4. Shri V.M. Doiphode, the learned SDR who has appeared on behalf of the respondents states that the dispute was not on the ground of principles but because of the fact that the appellants had failed to produce the evidence of expenses of which they had claimed deduction. He is willing that necessary deductions permissible in view of the judgments of the Supreme Court in the case of Union of India v. Bombay Tyres International and Assistant Collector v. Madras Rubber Factory may be allowed and the matter may be remanded to the Assistant Collector. A time limit be set for furnishing evidence by the appellants before the Assistant Collector. The appellants had not shown delivery charges separately.
5. We have heard both sides and have gone through the facts and circumstances of the case. During the hearing, the appellants have pressed for the following deductions from the assessable value :-
(i) Cost of transportation including delivery charges.
(ii) Turnover tax leviable under the provisions of the Bengal Sales Tax Act, 1941 and West Bengal Sales Tax Act, 1954.
(iii) Purchase tax in respect of goods sent to Delhi, Kanpur and Bangalore depots,
(iv) Octroi duty In view of the judgment of the Hon'ble Supreme Court in the case of the Union of India v. Bombay Tyres International reported in 1983 ELT 18%, the frieght, whether actual or equalised from the factory to the depot has to be allowed. In the matter before us the appellant is having depots at different places. We are of the view that the equalised freight has to be allowed and the deductions from the assessable value has to be given in view of the finding given in para No. 49 and 50 of the Bombay Tyres International Ltd.'s case. The Hon'ble Supreme Court had observed that "In cases, where the goods are sold by the assessee in the course of wholesale trade at a place or places outside the factory gate, the assessee will be entitled to a deduction on account of cost of transportation of the excisable article from the factory gate of the place or places where it is sold. The cost of transportation will include the cost of insurance on the freight even where such freight is charged on average basis so that the wholesale cash price from any place or places outside the factory gate is the same as the wholesale cash price has to be deducted in order to arrive at the real wholesale cash price at the factory gate and no Excise duty can be charged on it". In the clarificatory order in the case of Union of India and Ors. v. Bombay Tyres International Pvt. Ltd. reported in 1984 (17) ELT 329 (SC) the Hon'ble Supreme Court had held that the taxes which are permissible to be deducted under Section 4 from the assessable value cannot be disallowed even if they are paid periodically to the relevant taxing authorities in accordance with the relevant provisions of taxing statutes/rules. The taxes are additional sales tax, surcharge on sales tax, turnover tax. In the same clarificatory order the Hon'ble Supreme Court had held that the trade discounts which are known prior to the removal of goods but payable subsequently are permissible under Section 4 of the Central Excises and Salt Act. The Octroi duty in view of the judgments of the Hon'ble Supreme Court in the case of Union of India v. Bombay Tyre International reported in 1983 ELT 1896 and in the case of Assistant Collector of Central Excise v. Madras Rubber Factory reported in 1987 (27) ELT 553 is an allowable deduction. Loading charges incurred inside the factory gate cannot be deducted but loading and unloading charges and delivery charges incurred beyond the factory gate are deductible. Purchase tax is a tax on raw materials and not on the finished goods. It has, therefore, to be included as an element of cost for manufacture of the finished goods. Hence, it is not deductible from the assessable value. We remand the matter to the Assistant Collector with the directions that he should allow the necessary deductions on account of cost of transportation and delivery, turnover tax and octroi duty in view of these judgments. We further direct that the Assistant Collector will grant an opportunity for personal hearing. The appellants will have to furnish within three months the necessary information of expenses actually incurred for the relevant period for getting these deductions. The appellants stated that in respect of loading and unloading charges paid to coolies beyond the factory gate and conveyance charges paid for local deliveries, they did not have receipts from payees but they had their own vouchers. We direct that since these are petty amounts but are obvious expenses, the Assistant Collector may take a reasonable view in the matter. The appellants further stated that the octroi receipts described litharge as Battery Oxide. They claimed that both were one and the same thing. The Assistant Collector may consult some technical authority in the matter and then proceed accordingly. In the result we set aside the impugned order and remand the matter to the Assistant Collector with the direction that he will complete the re-adjudication proceedings within six months from the date of receipt of this order. In the result, the appeal is allowed by way of remand.