Customs, Excise and Gold Tribunal - Delhi
Dharampur Leather Cloth Co. Pvt. Ltd. vs Collector Of Central Excise on 6 June, 1986
Equivalent citations: 1986(10)ECC173, 1986(8)ECR397(TRI.-DELHI), 1986(25)ELT445(TRI-DEL)
ORDER Harish Chander, Member (J)
1. M/s. Dharampur Leather Company had filed six Revision Applications to the Joint Secretary to the Government of India, Ministry of Finance, Department of Revenue, New Delhi being aggrieved from Order-in-Appeal No. 1321/78 dated 30.11.78 passed by the Appellate Collector, Customs and Central Excise, Bombay. The learned Appellate Collector, Central Excise had disposed of six appeals by a consolidated order. After corning into existence of the Tribunal, the said Revision Applications were transferred to the Tribunal in terms of the provisions of Section 35P of the Central Excises and Salt Act, 1944, to be disposed of as appeals. Since a common issue is involved, all the six appeals are disposed of by a common consolidated order. Since the facts of all the six appeals are similar, the facts of the matter in respect of appeal No. 219/79 are reproduced below:-
2. Briefly, the facts of the case are that Dharampur Leather Cloth Co. Pvt. Ltd. had charged different prices in the invoices for the period from 23rd January, 1975 to 21st May, 1975 than approved prices. Superintendent, Central Excise, Bulsar issued a show cause notice dated 21.1.75 to them for short levy amounting to Rs.48,499.17 under Rule 10 read with Rule 173J of Central Excise Rules, 1944. In reply to the said show cause notice, the assessee had pointed out that the demand issued was bad in law in as much as it was based on goods sold on higher rate which was only 2% to 20% of the total material billed on a particular date. In all other cases 80% to 90% the goods were sold at approved prices. They had also stated that it was unreasonable and improper to treat entire material as capable of being sold at high prices when small quantity was sold at highest prices which was given by customers who required this small quantity due to demand in market and shortage of material in market and they were' not regular customers. It was further contended by the assessee that the price of stray and sporadic sales should not be treated in wholesale prices for the wholesale, and sometimes the material so sold was even sold on the approved price.
3. The learned Assistant Collector did not accept the contention of the appellant on the ground that the prices were approved under Section 4 of the Central Excises and Salt Act, 1944, and there being no wholesale market at the factory gate the prices of nearest place i.e. Bombay where market exists have taken as base for approval of price. The assessee's contention that the sales are from 2% to 20% at higher rates, and that they are stray and sporadic sales does not appear to be correct. The wholesale price was that at which the goods were capable of being sold at the time of removal of the article chargeable with duty (from factory in this case) at nearest place which was Bombay where wholesale market, exist and price of that place have been got approved. He had confirmed the demand raised by the learned Superintendent of Central Excise, Bulsar.
4. Similar were the observations of the learned Asstt. Collector in the other five matters. Being aggrieved from the orders passed by the learned Assistant Collector of Central Excise, the assessee had filed appeals before the learned Appellate Collector of Customs and Central Excise, Bombay. Before the learned Appellate Collector, it was contended by the assessee that the higher prices included selling cost and selling profit and this point was not taken up before the Assistant Collector at the time of adjudication. It was further argued that RT 12 returns had been finalised according to the approved classification list and the price list. Re-opening these price list will amount to sitting on judgement of the orders already issued, and the Assistant Collector did not enjoy this right under Section 35 of the Central Excises and Salt Act, 1944. It was further argued that one appeal was in time, and in one appeal and it was also argued that the price should be the price at which the goods had been actually sold and should not be taken on the capability of being sold. The learned Appellate Collector of Central Excise had held that the price has to be determined on goods of like kind capable of being sold in the market, and he had further held that in the matter before him, there was no dispute that the goods were of the same type and kind, and that the price charged at the highest rate would be the price at which the goods were capable of being sold at market nearest to the factory gate. The learned Appellate Collector of Central Excise did not accept the contention of the appellants that the Assistant Collector had no competence and jurisdiction to raise demands on short assessments discovered after the approval of the classification list and price list and even finalisation of RT 12 returns. He had held that the recovery of such short levy was being made under Rule 10. The only bar was the limitation provided under Rule 10 of the Central Excise Rules read with Rule 173 of the Central Excise Rules. The learned Appellate Collector of Central Excise had rejected the five appeals and in respect of Appeal No. V/19(3)/ 7/76-M/P-1I dated 15.9.77 had held that the demand was time barred. Being aggrieved from the aforesaid orders, the appellant filed Revision Application to the Central Government which stand transferred to the Tribunal to be disposed of as appeals.
5. Shri J.M. Patel, the learned Advocate has appeared on behalf of the appellants. He has reiterated the contentions made in the Revision Application. He has pleaded that in terms of the provisions of old Section 4 of the Central Excises and Salt Act, 1944, he has referred to the provisions of old Section 4 of the Central Excises and Salt Act, 1944 and has pleaded that there can be multiple assessable values. He has referred to the judgement of the Hon'ble Madras High Court in the case of Sharda Silicate and Chemical Industries, Coimbatore v. Collector of Central Excise, Coimbatore and Another reported in 1979 ELT (J) 20, wherein the Hon'ble Madras High Court had held that if different prices charged from different customers are based on very rational commercial basis for giving more liberal trade concession to one customer against the other and are solely motivated by trade considerations such price charged from each of its customers, should be taken as assessable value under Section 4 of the Central Excises and Salt Act, 1944. He has further argued that it was held by the Hon'ble Madras High Court that the excise duty would be leviable on the prices charged by the manufacturer, provided it is charged on a wholesale basis. If certain concessions are made available to the purchasers these concessions should be motivated by trade considerations and not flow from extra commercial considerations.
6. Shri Patel, the learned Advocate had argued that interpretation of the Sale price being the highest sale price will mean that the appellant will not be having any sale, and the appellants business shall come to a stand-still, and the Respondent will also not earn any revenue. Shri Patel has further argued that the period and the amount involved in the five appeals is as under:-
Appeal No. Period Amount ---------- ---------- ---------- 219 Jan.75 to May,75 48,499.70 336 June, 1975 22,237.72 339 July, 1975 38,064.12 340 August, 1975 22,097.93
7. Shri Patel, the learned Advocate has argued that in appeal No. 219 two show cause notices were issued and has argued that the subsequent show cause notice is not a valid show cause notice in the eyes of law. He further argued that the small percentage of sales on higher price cannot lead to the inference that the value was higher for the purposes of chargeability of the excisable duty. He has referred to the judgment of Hon'ble Patna High Court in the case of Kani Ram Ganpat Ram v. Commissioner of Income-tax reported in AIR 1941 Patna 527 wherein the Hon'ble High Court had held that though an Income-tax officer is not, bound by the Rule of resjudicate or estoppel by record yet he can re-open a previous decision on a same matter and come to a different conclusion only if fresh facts come to light. Shri Patel, the learned Advocate has pleaded that in the present matter, no fresh facts had come to the notice of the Assistant Collector and as such the earlier assessments cannot be re-opened. He has referred to another judgment of the Government of India in the case of Fertilizer Corporation of India Ltd. reported in 1982 ELT 812 where the Board had held that if the demand of duty was disposed of by the Assistant Collector's orders, the Additional Collector was not competent to re-open the issue on the basis of a fresh demand. He has pleaded that the facts of the appellant's case are similar and appellant's case is fully covered by an earlier judgment of Central Board of Excise and Customs and the appeal should be accepted.
8. In reply, Shri P.K. Ajwani, the learned Senior Departmental Representative has referred to the provisions of old Section 4 which was substituted by new Section 4 with effect from 1.10.75. He has referred to a judgment Of the Tribunal in the case of Modi Vanaspati Mfg. Co. Modinagar v. Collector of Customs and Central Excise, Meerut reported in 1985 (22) ELT 615. He has laid special emphasis on para number 29 of the said judgment and has pleaded that the Tribunal has held that the amendment in Section 4 was not retrospective and the amendment of Section 4 was from 1.10.75 and it cannot be read into the old Section 4 which was in force prior to 1.10.75. Therefore, for considering the position prior to 1.10.75, we have to take into account the wording of the old Section 4 i.e. Section prior to its supersession without reading into it the explanation answered (inserted ?) by the Finance Act of 1982. Shri Ajwani, the learned Sr. Departmental Representative has pleaded that the judgment of the Hon'ble Madras High Court reported in 1979 ELT (J) 20 does not help the appellant as the facts are different. He has further argued that the judgment of the Patna High Court in the case of Kani Ram Ganpat Ram v. C.I.T. reported in AIR 1941 Patna 527 does not help the appellant, the principle of resjudicata applicable in revenue proceedings and the said judgment is under the Income-tax Act, 1961. Shri Ajwani has further stated that the learned Advocate has referred to the judgment of the Central Board of Excise and Customs reported in 1982 ELT 812 in the case of Fertiliser Corporation of India Ltd. does not help the appellant as the said judgment has got no binding effect on the Tribunal, and the facts are different. He has pleaded for the dismissal of the appeal.
9. In reply, Shri Patel, the learned Advocate has argued that in the interpretation of the statutes, the benefit has to go to the assessee and the appeals filed by the appellant should be accepted.
10. After hearing both the sides and going through the facts and circumstances of the case, we would like to observe that the issue involved in these appeals is whether (under ?) the then Section 4 of the Central Excises and Salt Act, 1944, the prices are determined on their capability of being sold. Old Section 4 which was in force-during the relevant period is reproduced as under:-
"4. Determination of value for the purpose of duty - Where under this act, any article is chargeable with duty at a rate dependent on the value of the article, such value shall be deemed to be -
(a) the wholesale cash price, for which, an article of the like kind and quality is sold or is capable of being sold at the time of removal of the article chargeable with duty from the factory, or any other premises of manufacture or production for delivery at the place of manufacture or production, or if a wholesale market does not exist for such article at such place, at the nearest place where such market exists, or
(b) where such price is not ascertainable, the price, at which an article of the like kind and quality is sold or is capable of being sold by the manufacturer or producer, or his agent, at the time of the removal of the article chargeable with duty from such factory or other premises for delivery at the place of manufacture or production, or if such article is not sold or is not capable of being sold at such place, at any other place nearest thereto.
Explanation. - In determining the price of any article under this section, no abatement for deduction shall be allowed except in respect of trade discount and the amount of duty payable at the time of the removal of the article chargeable with duty from the factory or other premises aforesaid."
11. A simple perusal of Section 4 shows that wholesale cash price of an article is the price for which an article of like kind and quality is sold or is capable of being sold at the time of removal of article chargeable with duty from the factory, or any other premises of manufacture or delivery at the place of manufacture or production or if a wholesale market does not had such place, at the nearest place where such market exists. The learned Advocate had referred to a judgment of the Hon'ble Madras High Court in the case of Sharda Silicate and Chemical Industries, Coimbatore v. Collector of Central Excise, Coimbatore and Another. In the said judgment, the Hon'ble Madras High Court had held that if different prices charged from different customers are based on very rational commercial basis for giving more liberal trade concession to one customer against the other and are solely motivated by trade considerations such price charged from each of its customers, should be taken as assessable value under Section 4 of Central Excises and Salt Act, 1944. The Hon'ble High Court had further held that the excise duty would be leviable on the prices charged by the manufacturer. If certain concessions are made available to the purchasers, the concessions should be motivated by trade considerations and not flow from extra commercial considerations. The Appellant before us has not been able to establish that higher sale prices were charged on the basis of some rational commercial basis. The judgment of the Patna High Court of Kani Ram Ganpat Ram v. CIT reported in AIR 1941 Patna 527 does not help the Appellant. The said judgment deals with the application of the principle of resjudicata in revenue matters. Rule 10 of the Central Excises Rules related to the recovery of short levies and there was no bar under Rule 10 read with Rule 173J for recovering duty short levied. Accordingly, we hold that these demands should not be questioned or taken up under Section 35 of the Central Excises and Salt Act, 1944 and the Assistant Collector had the jurisdiction and competence to confirm such demands. The Tribunal in the case of Modi Vanaspati Mfg. Co., Modinagar v. Collector of Customs and Central Excise, Meerut reported in 1985 (22) ELT 615 had held that the amendment to Section 4 was retrospective with effect from 1.10.75 and it cannot be read into old Section 4 which was in force prior to 1.10.75. It would appear that if the legislature had so desired, a corresponding retrospective amendment could have been made in old Section 4. Para 29 at page 624 and 625 is reproduced as under :-
"29. We now come to the period prior to 1.10.75. Shri A.K. Jain representing the Department, had argued that even as regards the position before 1.10.75, when the old Section 4 of the Central Excises and Salt Act was in force, the old Section 47 of the Finance Act, 1982. In this connection he had relied on paragraph 31 of the judgment of the Supreme Court in the Bombay Tyre International Ltd., and their observation that it was not the intention of Parliament, when enacting the new Section 4, to create a scheme materially different from the embodied in the superseded Section 4. We find it difficult to accept this argument. The above mentioned observation of the Supreme Court is certainly a very important one, as indicating that the object and purpose as well as the central principle at the heart of the scheme remained the same. It would not, however, be correct to extend this principle so as to equate the old and the new Sections even where there is a clear difference in the wording. This is much more so when we consider the Explanation which was inserted through the Finance Act, 1982 and made retrospective from 1.10.75. Shri Jain urged that this was because the new Section 4 came into effect only from 1.10.75 and before that the old Section 4 was in force. It appears to us that if the Legislature had so desired, a corresponding retrospective amendment could have been made in the old Section 4. Since that has not been done, and the amendment made has been specifically made retrospective only from 1.10.75, it cannot be read into the old Section 4 which was in force prior to 1.10.75/. Therefore, for considering the position prior to 1.10.75 we have to take into account the wording of old Section 4, that is Section 4 prior to its supersession, without reading into it the Explanation inserted by the Finance Act of 1982."
12. In view of the above discussion, we uphold the findings of the learned Appellate Collector of Central Excise, in the result all the six appeals are dismissed.