Bombay High Court
Hindustan Mineral Products Co. Pvt. ... vs Union Of India on 17 March, 1994
Equivalent citations: 1994ECR553(BOMBAY), 1994(72)ELT23(BOM)
JUDGMENT M.L. Pendse, J.
1. The petitioner No. 1 is a private limited company engaged in manufacture of paints and pesticides. The Company carried out processing of goods on behalf of their customers after receipt of raw materials. One of the customers of the Company is M/s. Asian Paints (India) Ltd. and on behalf of them the Company processes a product known as 'Gattu Decorative Water Proof Cement Coating'. The product is processed from raw materials supplied by M/s. Asian Paints (India) Ltd. The goods are cleared to M/s. Asian Paints (India) Ltd. in accordance with Rule 56A of Central Excise Rules, 1944. In January 1979 the Company submitted price-list to the Excise Authorities indicating the assessable value of the goods processed by them on behalf of M/s. Asian Paints (India) Ltd. The assessable value shown consisted of manufacturing cost and manufacturing profits in respect of the product. The Excise Authorities issued show cause notice upon the Company to explain why the abatement of post-manufacturing expenses claimed in the price lists should not be disallowed. The Company filed reply and the Assistant Collector of Central Excise by order dated January 22, 1982 held that the post-manufacturing expenses and selling profits cannot be excluded. The Company carried an appeal before the Collector of Central Excise and an application was filed for stay of recovery of differential duty. The said application was turned down by the Collector of Appeals and that gave rise to the filing of this petition under Article 226 of the Constitution. The petition was admitted and the petitioners were permitted to clear the goods on the basis of the price lists produced.
2. After the decision of the Supreme Court in Bombay Tyres International Ltd., the petition was placed for hearing before one of us (Pendse, J.) and the assessing authorities were directed to permit the petitioners to submit the statement of deductions in respect of price lists already filed for proper determination of excise duty liability. The Excise Authorities were directed to finalise price lists within a stipulated period after giving an opportunity to the petitioners to produce documentary evidence in support of the claim. In pursuance of the order dated December 9, 1983 passed by this Court, the proceedings were remitted back to the Assistant Collector of Central Excise for a fresh determination. Before the Assistant Collector, the petitioners claimed discount on various counts. The deductions claimed under six heads were as under :-
1. Dealers discount of 3% allowed to all dealers at the time and place of removal.
2. Cash discount 5% allowed conforming to payment conditions.
3. Additional trade discount (turnover discount) of 3% allowed to dealers subsequent to removal and backed by credit notes.
4. Regular prompt payment discounts allowed to dealers conforming to payment terms again allowed subsequent to removal backed by credit notes.
5. Product discount.
6. Other discounts.
In addition, the petitioners also claimed deductions on account of agency commission, turnover tax, octroi and transit insurance. The Assistant Collector by an exhaustive order dated March 19, 1984 modified the price lists for the period from 1979 to 1983 and directed the petitioners to ascertain the differential duty accordingly and pay the differential amount in terms of the orders passed by this Court. The petition was then amended to challenge denial of certain deductions by the impugned order passed by the Assistant Collector and now the petition is set down for hearing.
3. Shri Shroff, learned counsel appearing on behalf of the petitioners, at the outset stated that the petitioners are not pressing the claim for deductions in respect of product discount and agency commission. The learned counsel advanced submission in respect of six items and we will examine the grievance in respect of each of the item.
The first item is in respect of additional trade discount (turnover discount) of 3%. The petitioners claimed that the said discount is granted to dealers subsequent to removal of goods by way of credit notes. Shri Shroff submitted that discounts are based on three factors - (a) credit policy of the Company in force; (b) potentiality of the market in which the dealer operates; and (c) dealer's actual sales performance and nature of extent of service put in by him. The learned counsel urged that the Assistant Collector was in error in not giving deductions on this count. It is not possible to accede to the submission of the learned counsel. The Assistant Collector points out that from the very nature of the discount claimed, it is evident that the same cannot be ascertained at or prior to removal of the goods in accordance with the decision of the Supreme Court in Bombay Tyres International Ltd. The Assistant Collector further points out that the petitioners failed to produce any evidence to sustain the claim that such discounts are granted. Shri Shroff very rightly did not dispute that such discounts are allowed only by agreement or in terms of sale or by established practice and which is required to be substantiated by the petitioners. The Assistant Collector points out that during the personal hearing, the petitioners were specifically asked to produce the evidence in support of the claim and the petitioners failed to do so. Shri Shroff submitted that it is undoubtedly true that the petitioners failed to produce evidence but made two-fold request. It was claimed that a fresh opportunity should be given to the petitioners by remitting the matter back to the Assistant Collector to enable the petitioners to produce the requisite evidence. In the alternative, it was claimed that the petitioners should be permitted to produce such evidence in this Court. We decline to accede to either of the requests. This Court while exercising jurisdiction under Article 226 of the Constitution cannot be converted into a Court of recording evidence. The contention of Shri Shroff, that the proceeding should be remitted back, cannot be accepted because the petitioners had ample opportunity to produce material before the Assistant Collector and have failed to avail of the same. The order passed by this Court on December 9, 1983 specifically provides that "the petitioners shall lead documentary evidence before the Assistant Collector in support of their claim." Shri Desai, learned counsel for the Department, points out that though the petitioners were called upon time and again to produce material in support of their claim, the petitioners deliberately did not avail of the opportunity. In these circumstances, it is not possible to accede to the claim of Shri Shroff that one more opportunity should be given to the petitioners.
There is another aspect of the matter which cannot be overlooked. Before the Assistant Collector, the petitioners repeatedly claimed that the finalisation of the assessment in pursuance of the order of this Court should be withheld till the assessment in respect of the claims made be M/s. Asian Paints (India) Ltd. is completed. The petitioners were desirous of taking advantage of the order which may be passed in case of M/s. Asian Paints (India) Ltd. The request to defer the hearing was turned down by the Assistant Collector and very rightly in view of the time schedule fixed by this Court while giving an opportunity to the petitioners to make a fresh claim in pursuance of the decision of the Supreme Court in Bombay Tyres International Ltd. It seems that the petitioners had no desire to lead any evidence before the Asstt. Collector and were persistently demanding that the assessment in respect of the price lists filed by the petitioners should not be completed. The cantankerous attitude taken by the petitioners disentitles Shri Shroff to claim that one more opportunity should be given to the petitioners. We decline to accede to the request because in the year 1983 while giving a fresh opportunity to the petitioners to claim deductions in pursuance of the decision of the Supreme Court, the present petition was kept pending and the petitioners were given opportunity to challenge the order of the Assistant Collector in the present petition to avoid multiplicity of litigation. In these circumstances, it is futile to claim that the petitioners should be given another chance to lead evidence. It is also necessary to mention that the claim on this count made by M/s. Asian Paints (India) Ltd. was also subsequently turned down by the Collector of Appeals. In our judgment, the refusal to grant discount under this heading by the Assistant Collector cannot be faulted.
4. The second claim for deduction made by the petitioners is in respect of cash discount. The Assistant Collector allowed the discount at 5% when in fact it has been given. Shri Shroff submitted that cash discount of 5% should be given across the board i.e. even where it has not been availed of. The Assistant Collector did not accept the contention and in our judgment very correctly. The refusal to give cash discount in respect of all sales regardless of whether the discount is availed of or nor cannot be faulted.
The third head of discount claimed by the petitioners is in respect of regular prompt payment discount. The learned counsel urged that the discount is given at the rate of 3% at the year end on the entire turnover of the dealer less the turnover covered under cash discount. The claim is made on the basis of the circular issued, but the same was not produced before the Assistant Collector. Shri Shroff submitted that the discount under this heading was granted by Assistant Collector while completing the proceedings in respect of the claim made by M/s. Asian Paints (India) Ltd. The learned counsel very fairly stated that the Collector of Appeals set aside the said order in case of M/s. Asian Paints (India) Ltd. but urged that the ground furnished by the Collector of Appeals is not correct. We do not wish to examine the correctness of the grounds in the present petition because the order of the Collector of Appeals, we are informed at the bar, in the case of M/s. Asian Paints (India) Ltd. is pending before the Tribunal. In our judgment, the finding of the Assistant Collector that the petitioners are not entitled to have regular prompt payment discount because of lack of evidence, cannot be faulted.
5. Shri Shroff then submitted that the Assistant Collector should have granted discount under the heading "other dealer discount". The petitioners claimed discount at various rates under this heading from the year 1979 onwards. Shri Shroff submitted that four separate items are covered under the heading and those items are - (a) scheme; (b) bonus; (c) overriding commission; and (d) special deal and special discount. The learned counsel did not dispute that the break-up in respect of each of the item was not furnished to the Assistant Collector. The benefit of the discount under the heading was sought on the basis of circulars allegedly issued by M/s. Asian Paints (India) Ltd. The claim was turned down by the Assistant Collector on the ground that the petitioners did not bother to produce any of the circular or any of the material in support of the claim. Shri Shroff did not dispute that it was bounden duty of the petitioners to produce material in support of the claim and in the absence of material it is not known what was the quantum of discount payable at the time of removal of goods as laid down by the Supreme Court. The learned counsel submitted that the discount on the basis of bonus is required to be granted but submission cannot be accepted because the actual quantum of bonus payable even assuming that there is such circular, could not be ascertained at the time of removal. Shri Shroff submitted that while completing the proceedings in respect of the claim made by M/s Asian Paints (India) Ltd., the Collector of Appeals disallowed the deduction on the ground that the right to give discount is at the discretion of the Company and it is not possible to ascertain whether dealer is entitled to such discount. Shri Shroff of submitted that the conclusion is not correct but we are not able to accept the contention. The discount claimed under the heading 'town commission/overriding commission' also suffers from the same infirmity. In regard to the claim under the heading 'special deal and special discount' again the same infirmity is noted by the Assistant Collector because the petitioners failed to produce any evidence. The claim under this heading was also turned down by the Collector of Appeals in the case of M/s. Asian Paints (India) Ltd.
As mentioned hereinabove, Shri Shroff did not press claim of discount under the heading 'agency commission'.
6. The last claim for discount is under the heading 'transit insurance'. The petitioners claimed entitlement of transit insurance in the year 1982-83 and the discount claimed is at 0.01% based on net sales of entire range of products sold by M/s. Asian Paints (India) Ltd. The Assistant Collector disallowed the claim on the ground that the insurance policy was not produced and the claim is not identified with the product 'Gattu Cement Coating' which was manufactured by the petitioners and in respect of transport of which the discount was sought. Shri Shroff submitted that the claim under this heading was awarded both by the Assistant Collector and Collector of Appeals while finalising the proceedings of M/s. Asian Paints (India) Ltd. and if the claim can be granted in case of M/s. Asian Paints (India) Ltd., then there is no rationale why it should be denied in case of the petitioners. The submission is entirely misconceived. In the first instance, M/s. Asian Paints (India) Ltd. produced the material before the Assistant Collector to seek discount under this heading but the petitioners produced no material whatsoever to support the claim. The petitioners did not produce gate-passes, invoices or any other documentary evidence to support the claim made in the application before the Assistant Collector that the quantity cleared to factory at Bhandup and other locations between years 1979 and 1983 was 24,45,412 kgs. and 13,36,055 kgs. respectively. Shri Desai points out that though letters after letters were addressed to the petitioners to produce the material in support of the claim, the petitioners did not do so, but on the other hand advised Assistant Collector to visit their factory and find out the material. In these circumstance, no fault can be found with the finding of the Assistant Collector that discount cannot be granted. The insurance policy on which Shri Shroff desires to place reliance, was taken by M/s. Asian Paints (India) Ltd. and is a comprehensive policy. Shri Shroff conceded that Gattu Cement Coating is not only manufactured by the petitioners but also by M/s. Asian Paints (India) Ltd. and unless it is established as to how much insurance is claimed in respect of transport of Gattu Cement Coating by the petitioners on the one hand and M/s. Asian Paints (India) Ltd. on the other, it is impossible for the Assistant Collector to grant discount under this head. In our judgment, the order of the Assistant Collector does not suffer from any infirmity and the petition must fail.
7. Before parting with the judgment, it must be mentioned that at one stage of hearing Shri Shroff was desirous of making a claim dehors the contention raised in the petition by reference to the decision of the Supreme Court reported in 1989 (39) E.L.T. 493 (S.C.) Ujagar Prints etc. etc. v. Union of India and Others. The attempt was given up when it was made clear to the learned counsel that in case the petitioners are desirous of basing the claim on the grounds different than those raised before the Assistant Collector, then the order of the Assistant Collector can no longer be challenged. Shri Shroff thereafter gave up the attempt and proceeded to challenge the order of the Assistant Collector on the submissions considered in this judgment.
8. Accordingly, petition fails and rule is discharged with costs.