Customs, Excise and Gold Tribunal - Delhi
Jagatjit Industries Limited vs Collector Of Central Excise on 11 February, 1987
Equivalent citations: 1987(11)ECR529(TRI.-DELHI), 1987(29)ELT478(TRI-DEL)
ORDER K.L. Rekhi, Member (T)
1. The appellants are aggrieved because their refund claim, arising out of Order Nos. 874 to 878, dated 31-7-1973 passed by the Central Government in revision, has been rejected by both the lower authorities.
2., The facts of the case, in brief, are that the appellants sold their Milkfood 'Viva' through their sole selling agent, M/s. Voltas. The dispute that was taken to the Central Government in Revision Application was for exclusion, from the assessable value, of post-manufacturing expenses, namely ':-
(1) agency commission; (2) advertising expenses; (3) selling expenses; (4) freight; and (5) insurance.
The Central Government took up this Revision Application for consideration along with four other Revision Applications filed by the same appellants. The point of dispute in those other four Revision Applications was a different one, namely, whether the sale price charged by the appellants from their sole distributor could form the basis of assessment of central excise duty. However, the Central Government mistook that the question involved in all the five Revision Applications was an identical one. On that footing, the Central Government passed the following Order-in-Revision :-
" ORDER - As all the five revision applications, involve identical issues, a consolidated order is passed in all the cases.
Government of India have considered the points raised in the five revision applications and observe that the cases relate to the fixation of assessable values Under Section 4 of Central Excises and Salt: Act, 1944. Government observe that the prices charged by the petitioners to their sole distributors are acceptable for purposes of valuation under the above section. Government of India order that these be adopted as the basis for assessment in these cases.
Sd./-
(C.T.A. PILLAI) Jt. Secretary to the Govt. of India."
It is the interpretation of the above Order-in-Revision that has given rise to the present controversy.
3. We have heard both sides and have given the matter our earnest consideration. We observe from the aforesaid Order-in-Revision that :-
(1) it did dispose of "all the five Revision Applications" by the "consolidated order" aforesaid; and (2) It did not reject the fifth Revision Application which is relevant to the present dispute before us. On the contrary, use of the words "are acceptable", in the order shows that the order was in favour of the appellants.
At the same time, we are clear in our mind that it is not open to us to either amend the aforesaid Order-in-Revision or to place upon it an interpretation which would render the said order meaningless and infructuous. The lower authorities have rejected the appellants' refund claim arising out of the said Order-in-Revision on the ground that M/s. Voltas were the sole selling agent and not. a sole distributor and that since there was no sale of 'Viva' to them in this case, there could be no "prices charged" to them. We observe that this literal interpretation adopted by the lower authorities had resulted in making the Order-in-Revision an exercise in futility in so far as the fifth Revision Application relevant to our proceedings is concerned. The appellants pleaded before us that the word "charged" occurring in the Order-in-Revision should be interpreted in the context in which it had occurred. [Reliance on A.I.R. 1960 (S.C.) 186] and that the word "distributor" should be interpreted to include a selling agent also. We do not agree with them. There could be no "prices charged" when there was no sale of the goods to M/s. Voltas. Similarly, a distributor and a selling agent are two different entities. One cannot be read for the other.
4. Yet, we are conscious that the Order-in-Revision has to be given its due meaning which should not be repugnant to the context of the proceedings in which it was passed. We find that of the five elements claimed by the appellants as deduction from the assessable value in the Revision Application disposed of by the Central Government by the aforesaid Order-in-Revision :-
(1) advertisement expenses and selling expenses stand dis-allowed by the Hon'ble Supreme Court in their judgment in the case of Bombay Tyre international (1983 E.L.T. 1896 SC);
(2) agency commission given to a selling agent (an distinct from trade discount given to an actual buyer of the goods) stands disallowed by the Hon'ble Supreme Court by their judgment in the case of M/s. Coromondal Fertilizer, 1984 (17) E.L.T. 607 (SC).
During the hearing before us, the appellants acknowledged the above position in law. The aforesaid Order-in-Revision also does not allow these deductions. The appellants are, therefore, not entitled to any refund on account of advertisement expenses, selling expenses and agency commission. That leaves only freight and transit insurance. The Supreme Court judgment in the case of Bombay Tyre International aforesaid allows these two deductions for the purpose of arriving at the assessable value of excisable goods. The learned representative of the department stated that he had no objection to consequential refund limited to freight and transit insurance being granted to the appellants. We agree with him.
5. In the result, we set aside the impugned orders and allow this appeal in terms that the Assistant Collector shall quantify the amount of consequential refund due to the appellants on account of exclusion of freight and transit insurance only and shall grant such refund to the appellants expeditiously.