Customs, Excise and Gold Tribunal - Tamil Nadu
Commr. Of C. Ex. vs Tractor And Farm Equipments Ltd. on 18 March, 1998
Equivalent citations: 1999(106)ELT538(TRI-CHENNAI)
ORDER
U.L. Bhat, J. (President)
1. Respondent, engaged in a manufacture of Tractors was filing price lists from time to time and clearing the goods on payment of duty on approved price. The dispute in this case relates to the period from February, 1990 to September, 1994. Respondent has two factories in Tamil Nadu and one in Karnataka. The Tractors are sold to wholesale dealers in their respective states and outside the respective States and also to retail customers at the respective factory gates. Some Tractors are transferred to depots outside the respective states and sold subsequently to the wholesalers or customers. The main dispute in this appeal relates to the assessable value of the Tractors manufactured in Karnataka and sold directly to the users i.e. customers. The other dispute relates to Tractors manufactured in Karnataka, transferred to depots and sold from the depots.
2. Whenever Karnataka Tractors are sold directly to users and delivery is effected at the users end, the transporting agency collects freight at the time of delivery. It was subsequently discovered as a result of investigation commenced on the basis of intelligence received, that in all such cases respondent collected Rs. 500/- per Tractor from the transport agency as "Freight Reimbursement Charges" (for short TRC). It was also found that from the wholesale dealers in respect of all Tractors sold from the depots, respondent collected in addition to the approved factory price, amounts ranging from Rs. 1100/- to Rs. 1300/- per Tractor as "Tax Suffered".
3. Accordingly, show cause notice dated 1-3-1995 was issued, revealing the above facts in detail, alleging suppression of material facts and mis-declaration of value with intent to evade duty and proposing demand of duty on the "additional consideration". Respondent raised various contentions in reply to the notice. Respondent also sought to justify the collection of amounts as "FRC" and "Tax Suffered". FRC was collected when the transport agency of individual customer would come to take delivery and the respondent would be required to give services such as loading and taking care of the Tractors till such time as the Transport Agency would get sufficient number of customers for transporting the minimum number of Tractors in each truck. In Tamil Nadu, some of the inputs enjoyed sales-tax concession if the manufactured Tractors are sold in Tamil Nadu, whenever the Tamil Nadu Tractors are removed to depots outside the State the benefit of the concession was not available. There was no such concession available in Karnataka. Respondent was collecting 50% of the amount of tax concession in respect of the Tamil Nadu Tractors sold outside the State as also the Karnataka Tractw Respondent also contended the since the factory gate price was available and the show cause notice did not point out any thing wrong in such price, the question of demand of duty on any additional amount recovered in respect of the goods sold from depots would not arise. The Collector of Central Excise accepted the contentions as valid and dropped the demand. This order is not challenged.
4. Respondent has three types of transactions, namely, sale in wholesale at the factory gate to wholesale dealers; transfer to depots and subsequent sale to wholesale dealers or customers and sale at the factory gate to individual customers. From what is indicated, it is clear that respondent had only one class wholesale buyers and this class would be governed by the approved factory gate price. If in respect of depot sales, an additional amount is collected, that cannot affect the acceptability of the approved wholesale price unless the department can make out that the wholesale purchasers at the depots constitute a separate class of buyers within the meaning of proviso (i) of Section 4(l)(a) of the Central Excise Act, 1944. No such case has been profound by the department. Therefore, the department cannot demand duty on any price higher than or different from the approved factory gate prices.
5. For the same reason, we have to hold that the amounts collected as "Tax Suffered" from all buyers of the Karnataka Tractors at the depots cannot be included in the assessable value as all those buyers do not form a class distinct from wholesale buyers at the factory gate governed by the approved wholesale price.
6. In this view, we find no reason to interfere and accordingly dismiss the appeal. The cross-objection being merely supportive, is dismissed.