Customs, Excise and Gold Tribunal - Tamil Nadu
Elgi Equipments Ltd. vs Cce on 15 March, 1996
Equivalent citations: 1996(65)ECR86(TRI.-CHENNAI)
ORDER V.P. Gulati, Member (T)
1. For the reasons stated in 'he petition, the delay in filing of the supplementary appeals is condoned.
2. The prayer in the applications is for dispensation of pre-deposit of duty demand of Rs. 40,13,520.17 demanded in the respective impugned orders and a penalty of Rs. 10 lakhs levied in terms of the impugned order.
3. The learned Sr. Counsel pleaded that the appellants are manufacturers of various types of pumps and their sales pattern in respect of the same is as under:
(i) part of the goods are sold to the distributors at factory gate;
(ii) part of the goods removed for stock transfer to the depots;
(iii) part of the goods are sold for retail sale at the factory gate and
(iv) small portion is sold to retail dealers who after purchasing the same sell in retail to the customers.
The demand is for two periods. For the first period from 1.4.1988 to 31.12.1990 and the show cause notice was issued on 31.3.1993 and the amount of duty involved is Rs. 6,04,087. For the second period from 1.1.1991 to 16.4.1992, the remaining demand is attributable. Appellants had filed part-I price list applicable to tha sales made to the distributors at the factory gate and had adopted this price for the purpose of assessment for clearances made in the four channels as above He has pleaded that their practice was to pay duty in respect of sales made in retail and to the small retail dealers on the invoice price at which the same were sold to them. There was some dispute in regard to the value to be adopted for assessment and the same came to be resolved in favour of the assessee and it was held that the price applicable is price charged at the factory gate to the distributors. After resolution of this dispute the appellant filed one price list for assessment purposes showing the price charged to the distributors at the factory gate, as the price for the purpose of assessment. It was pointed out that as per the procedures this price should not form the basis for assessment of the goods made through various channels and it has been held by the learned lower authority that such a price is applicable only in respect of the clearances made to the distributors at the factory gate and in respect of retail sales and sales given to the small retailer the invoice value would form the basis for the assessable value. Earlier they were allowed the discount of 20% but in respect of the sales made to the distributors and the stock transfer also only a discount of 10% is allowed. The discount of 20% has beer educed to 10% for the reason that in the statement recorded the Director has stated that an extra discount of 10% is given to the dealers to meet certain expenses. It is now settled law that wherever ex-factory price is available Under Section 4(1)(a), the retail price cannot form the basis for assessable value and the same should form the basis in respect of sales made to other class of buyers. In the present case, sales are made to the distributors and that alone should form the basis for the assessable value for all the clearances made. So far as the differential duty demand in respect of retail sales made is concerned, the same works out to Rs. 23,07,880. Demand on account of denial of the extra discount of 10% works out to about Rs. 17 lakhs. Merely because a Director has stated that some portion of the discount is to be used by the distributors to meet certain expenses relating to the sale of the goods does not mean that this discount under law is not admissible.
4. The learned DR pleaded that the learned lower authority has entered detailed findings and he adopts the reasonings of the same.
5. We have considered the pleas made by both sides. We observe that in para 52 of the impugned order the learned lower authority has clearly held that he has demanded duty in respect of retail sales and this differential duty works out to Rs. 23,07,880. As rightly urged by the learned Counsel where the factory gate price is available in respect of the sale in the wholesale trade Under Section 4(l)(a) the same would form the basis for assessment in respect of the sales made otherwise than in wholesale. Prima facie, so far as this portion of the order is concerned, the same is not sustainable. So far as the denial of the 10% discount is concerned, we observe that there is prima facie some evidence to show that this portion of the discount is being utilised for promoting the sales and this will require to be gone into in detail and which is not permissible at this interlocutory stage.
6. The learned Counsel pleaded at this stage financial hardship and liquidity problems. In the facts and circumstances of the case and taking into consideration the plea of financial hardship, we direct the petitioner to pre-deposit a sum of Rs. 10 lakhs (Rupees ten lakhs) on or before 26.4.1996 and to report compliance on 30.4.1996 subject to which the pre deposit of balance amount of duty shall be dispensed with and the recovery stayed pending appeal. The matter will be called on 30.4.1996 for reporting compliance.
(Pronounced and dictated in open Court.)