Customs, Excise and Gold Tribunal - Delhi
Cce, New Delhi vs M/S. Prabhat Zarda Factory on 20 March, 2001
Equivalent citations: 2001(75)ECC302
ORDER
Jyoti Balasundram The respondents herein are engaged in the manufacture of chewing tobacco of different brands classifiable under Central Excise Triff sub-heading 2404.40. The Department was of the view that the assessee had misdeclared their duty paid godown as the "place of removal" in the price declaration in respect ofsuch transaction whereas the transaction of sale is completed only at the destination of the buyer where delivery in effected finally; therefore, in such transacions the buyer's place is the correct 'place of removal' as per Section 4 of the Central Excise Act w.e.f. 28.9.96. The Department also of the view that the respondents had not included the element of freight and insurance in the assessable value of the goods in respect of such transactions and had not paid Central Excise Duty amounting to Rs.59,29,536/- on the same during the period 1.10.96 to 11.3.99. Accordingly, a SCN was issued proposing recovery of duty of the amount above mentioned alongwith imposition of penalty. The adjudicating authority confirmed a duty demand of Rs.39,53,024/-, holding as under:
"I find that the additional consideration on account of transportation charges and insurance expenses aggregates Rs.1,18,59,073.00 during the period 1.10.96 to 11.3.99(refer para 5 supra). On the basis of the following formula, the differential duty is worked out as under:
Assessable Value= Selling Price 1+Rate of Duty 100 Duty=Selling Price-Assessable Value Taking Differential Value for Selling Price, We have AV= 11859073 1+ 50 100 AV=Rs.79,79,06,049.00 Duty=Rs.1,18,59,073.00-Rs.79,06,049.00= Rs.39,53,024.00 He also imposed a penalty of amount equal to duty under Rule 173Q of the Central Excise Rules road with section 11AC of the Central Excise Act and also ordered recovery of penal interest under Section 11AB of the Act.
2. The Revenue is aggrieved by the requantification of the duty demand. According to the Revenue, the additional consideration cannot become part of the cum-duty price but becomes part of the value of such goods. It is the contention of the Revenue that allowing abatement, taking additional consideration to the cum-duty price is contrary to the provisions of Section 4 of the Central excise Act and Rule 5 of the Central Excise(Valuation)Rules.
3. We have heard Shri R.C.Sankhla, Ld. DR and Shri K.Narsimhan, Ld. Advocate. We find that the issue in dispute stand settled in favour of the assessee by the decision of the Larger Bench of the Tribunal in the case of Srichakra Tyres Ltd. vs CCE, Madras reported in 1999(108)ELT.361 wherein it has been held that total duty proposed to be demanded shall have to be abated from the cun-duty price actually received and liable to be received as a consideration for sale of goods. The relevant extract from para 9.1 of the Larger Bench judgment is re-produced below:
"9.1. Sub-section 4(d)(ii) envisages deducation of aggregate effective duty payable on the goods under the Act, if the wholesale price at which goods are sold includes all such excise duties. Wholesale price is the total consideration received by an assessee against sale of excisable goods in wholesable trade. Wholesale price will include the element of duty payable on any goods becuase such duty forms part of the consideration for sale of the goods according to terms of sale of the goods. If any further demand of duty is created against an assessee and such further demand of duty cannot be passed on to a customer in view of the terms of sale of any goods between the assessee and a customer, the orginial consideration(including duty, if any) received by an assessee for sale of the goods in wholesale trade, has be taken as cum-duty price for the purpose of demand of hgiher duty subsequently. Any hypothetical consideration that the sale price would have gone up had correct duty been paid in the first instance cannot, in our opinion, be made the basis for non-abatement of differential duty from the realised sale price. We have to take into account the factsas they are not what they might have been. Total duty proposed to be demanded shall have to be abated from the cum-duty price actually received and liable to be received as a consideration for sale of goods. This is the mandate of sub-section 4(d)(ii)".
4. Following the ratio of the Larger Bench decision cited supra, we hold that there is no legal infirmity in the impugned order and according uphold the same and reject the appeal. Cross objections abate.