Customs, Excise and Gold Tribunal - Delhi
Bata India Limited vs Collector Of Central Excise on 23 May, 1986
Equivalent citations: 1986(9)ECC198, 1986(8)ECR403(TRI.-DELHI), 1986(25)ELT559(TRI-DEL)
ORDER V.P. Gulati, Member (T)
1. These are revision petitions filed before the Central Government and which stand transferred to this Tribunal to be disposed of as if these were presented before the Tribunal.
2. The appellants have filed revision application before the Government of India in one case against the order of the Appellate Collector, Central Excise, New Delhi and in the other case against the order of the Board in revision under Section 35 of the Central Excises & Salt Act as applicable at the relevant time. The issue involved in both the cases relates to the valuation of the goods manufactured by the appellants namely, shoes, under the brand names, BSC and Bata. The appellants are marketing the BSC brand shoes through their authorised wholesale dealers from their depots and the Bata shoes are marketed by them through their own retail outlets. It has been held by the Board and the Appellate Collector that so far as the BSC brand shoes are concerned, the price list of the same will be fixed under Section 4(1 )(a) read with Section 4 Sub-section 2 and so far as the Bata brand shoes are concerned, the value of the same will be fixed under Section 4(1) read with Rule 6(a). So far as the issue relating to the valuation of BSC shoes, the learned advocate for the appellants, Shri Bajoria, stated that he is not contesting the valuation of these shoes in terms of Section 4(1)(a) read with Section 4(2) in view of the latest pronouncement of the Supreme Court in the case of Bombay International Tyres 1983 ELT 1986. The issue, therefore, to be decided. by us relates to the Bata brand shoes. In this connection, the respondents wanted to file some additional evidence to show that the Bata brand shoes are also sold in the wholesale lots to independent buyers. This evidence was not produced at any stage before the lower authorities, that is, either before the Assistant Collector, Appellate Collector or the Board, who passed various orders. The evidence sought to be produced is not contemporaneous in nature, having been obtained much after the period to which the dispute relates. Shri Bajoria also took objection stating that the appellant was in appeal and evidence was sought to be introduced to enhance the claim of the respondents and this could not be allowed. The request for admission of additional evidence was, therefore, turned down and a separate order in this regard is issued.
3. The dispute regarding the valuation in the present proceedings arose after introduction of the new Section 4 when the appellants were asked to file fresh price list in the context of this Section. Before the introduction of new Section 4 in 1975, the appellants' products BSC shoes and Bata shoes were being assessed in terms of Board's order No. 12/A/13-AMP 1957 dated 16-10-57. Under this order, certain abatements from the sale price were allowed for the purpose of assessment for both Bata and BSC brand shoes, separately for canvass shoes and leather shoes. The issue regarding separate valuation of BSC shoes and Bata shoes did not arise in the then proceedings. The appellants' main contention is that both the Bata and BSC brand shoes are identical except for the brand name affixed thereon. There are various varieties of shoes designated as Ambassador etc. which are sold under BSC label as well as Bata label. The retail prices of the goods marked thereon are also the same. The plea is that since the retail price is same and so is the trade description and quality, the two brands of shoes should be treated alike for the purposes of valuation under Section 4 of the Central Excises & Salt Act. The learned advocate for the appellants cited the case of Joint Secretary to the Government of India Vs Food Specialities Limited : 1985 (22) ELT 324 in support of his plea. In the facts of this case, the respondents were selling goods to M/s Nestle with brand name of M/s Nestle affixed thereon. The Supreme Court held that the value at which the respondent sold the goods to the Nestle should form the basis of the price of goods and not prices at which the Nestle sold the goods in the wholesale market. The Supreme Court negatived the contention of Revenue that the value of trade mark should form a component of the assessable value. He pleaded that the brand BATA and BSC are embossed with a view to earmark the goods for the stream of sale in which the goods are to be sent for sales through retail shops of Bata or through the wholesale dealers.
4. Shri Tripathi, the learned SDR for the Department pleaded that the Bata brand goods and BSC brand goods were known in the market commercially as two separate category of goods and that they were not such goods. He has pleaded that the test of commercial parlance as upheld by Supreme Court and various High Courts should determine the basis for arriving at the value. He stated that since the goods are known as two separate category of goods, the value of these should be arrived at independently based on the parameters of Section 4 of Central Excises & Salt Act, 1944 as applicable to each category of goods. He has cited in this regard the examples of lux and lux supreme which are priced differently. He further pleaded that BSC brand shoes could be sold at a lower price while in the case of Bata brand product, the prices are fixed. He further pleaded that in the case of BSC shoes, no sales tax is paid. He also stated that in the case of Bata there is a guarantee for repair of manufacturing defects within a short period. He, however, could not produce any evidence in regard to these averments. He stated that there are some shoes which are manufactured with BSC brand alone while there are others which are manufactured with Bata brand alone. He stated that in the case of BSC brand alone, the sale is to wholesale or authorised wholesale dealers and the discount shown in the price list for sale to such dealers cannot be made applicable in the case of Bata shoes which are sold in retail. He has pleaded that the case law in the case of Food Specialities is not relevant in the facts of this case.
5. Shri Bajoria in reply stated that certain types of shoes are manufactured under the Bata brand and are not marketed with the BSC brand affixed thereon. In this regard, according to him, there is no question of price applicable to BSC shoes being applicable. He reiterated that since the same type of shoes under Bata and BSC brands were sold at the same price, the same prices should be adopted for assessment purposes in respect of each type of shoes. He stated that the plea that there was a warranty in the case of Bata shoes and not in the case of BSC shoes and also no sales tax is paid on BSC, is not correct and no evidence has been adduced by the Revenue in this regard. He pleaded that discount has to be allowed in respect of Bata also as even under the valuation Rules it is permissible. He further reiterated that it had been accepted by the Department that the Bata and BSC shoes are of the same >type marked with the same retail price. The example of lux and lux supreme given by SDR has no relevance to the facts in his case in as much as the lux and lux supreme are two separate products and are of different quality.
6. First point that arises for consideration is whether the shoes with Bata and BSC brands can be considered as such goods for the purpose of Section 4 of the Central Excises & Salt Act. The appellants' plea is that the shoes of same type and quality are marketed under both the brands and these carry the same price and brands only indicate the channel of marketing. The question is whether in this background, affixing of different brands for the same commodity would make the good different for the purpose of assessment. We have observed that no evidence has been placed before us that shoes of the same type and style like Ambassador etc., marketed both under Bata and BSC brand differ, in any way, in quality or are different in any other manner except the brand names these are carrying. It is also admitted that before coming into force of the new Section 4, both brands of shoes of the same type were assessed at the same assessable value. The Board have observed as under in their order No. 4 of 1980 dated 22-10-80 which is subject of the appeal before us:
"With regard to the Bata brand of footwear, the party had contended that Rule 6(a) of the Valuation Rules, 1975 has no application as the Bata brand, both with regard to quality and value, was identical with their BSC brand of footwear. In support of this contention, the party produced at the time of personal hearing a copy of an order passed by the erstwhile Central Board of Revenue in Central Excise Appeal No. 6 EXM of 1956 dated 2-5-1956, wherein the said Board had held that the 'Bata' footwear and BSC footwear were goods of the "like kind and quality". The party pressed that manufacturers being the same and the value and the quality of the goods being the same, the Bata and the BSC brands of footwear should be assessed in the same manner, and since the value of the BSC brand of footwear was known, the value of the Bata brand of footwear should be considered to be the same. Even if the quality and the retail sale price be the same, the BSC brand of footwear and the Bata brand of footwear cannot be treated as "such goods". They may be similar goods, but goods of different brands manufactured by the same assessee are not "such goods" for purposes of Section 4 of the Act. The party has produced a copy of the erstwhile Central Board of Revenue Order in Central Excise Appeal No. 6 EXM II of 1956. This order has been passed in the context of the old Section 4. It was in the language of the old Section 4 that the expression goods of the "like kind and quality" existed. In. this context it is pertinent to examine whether the use of word "such" in place of the word 'like kind and quality' in any way, materially changed the scope of Section 4. The scope of word "such" has not been amplified in Section 4. But what the Department reads in this word is that the goods to be of 'such goods' have to be the same in all respects and identical goods. The meaning of word 'such' as given in the Concise Oxford Dictionary is as under:
"of the same kind or degree;
of the kind or degree already described or implied in context"
In T.P. Mukherjee's Law Lexicon : Vol. 2: 1982, the word 'such' has been defined as 'of that kind, of the same or like kind.' In its grammatical usage and in its nature and ordinary sense, the word 'such' is understood to refer to the last antecedent, unless the meaning of the sentence would thereby be impaired, which does not seem to be the case here. The word 'such' indicates something just before specified, or spoken of, that is proximately, and not merely previously. It particularises the immediately preceding antecedent and not everything that has gone before, it signifies what has preceded proximately and not just previously or formerly."
"Such" is defined in the New Webster Dictionary as under:
"Of the kind, character, degree, or extent of that or those indicated or implies, as: Such a woman is dangerous. Like or similar in kind or quality, as tea, coffee, and such commodities, being similar or the same as that last stated or indicated, as: Such nonsense is the case. Being the person or thing or persons or things indicated, as: If any member is late, such member shall be suspended. Of so extreme a degree or kind; as, such honor,-pron. Such a person or thing or persons or things; the person or thing or persons or things indicated; as, once a friend but no longer such. - adv. So, very, in such a manner, or to such a degree, used to precede an attributive adjective; as, such terrible deeds. - as such, as being what is indicated or implied, as: The leader, as such, is entitled to respect. In itself, as; Vice, as such, does not appeal to him. - such for example; of the indicated or implied kind; as, a picture such as this one."
The new Section 4 reads as under:
"Where under this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value shall, subject to the other provisions of this section, be deemed to be -
(a) the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale:"
The old Section 4 reads as under:
Statutory changes. - Section 4 as it originally stood, was 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 the wholesale cash price, for which an article of the like kind and quality is sold or is capable of being sold for delivery at the place of manufacture and at the time of its removal therefrom, without any abatement of deduction whatever except trade discount and the amount of duty then payable."
As pointed out in the Board's impugned order, the word 'like kind and quality' has been replaced by the word 'such'. We find taking into consideration the meaning of the word 'such' as given in the Dictionary as also as understood in the Law Lexicon that the substitution of the word 'such' for Mike kind and quality' has not made any difference to the language of Section 4. The Hon'ble Supreme Court while examining the scope of Section 4, both the old and the new one, have observed in the case of Bombay Tyre International Limited : 1983 ELT 1896 (SC) : "The basic scheme for determination of the price in the new Section 4 is characterised by the same dichotomy as that observable in the old Section 4. It was not the intention of the Parliament when enacting the new Section 4 to create a scheme materially different from that embodied in the superseded Section 4. The object and purpose remained the same and so did the central principles at the heart of the Scheme. The new scheme is merely more comprehensive and the language implied is more precise and definite as compared to the old Section 4. For instance under, new Section 4 the phrase "place of removal" has been defined not merely as "the factory or any other place or premises of production or manufacture of the excisable goods" from where such goods are removed, but has been extended to "a warehouse or any place or premises wherein the excisable goods have been permitted to be deposited without payment of duty". Similarly, new Section 4 also make express provision in relation to sales to special or favoured buyer from whom a low price is charged because of extra commercial considerations."
The fact that the Supreme Court has held that the object and the purpose of levy under new Section 4 remain same as in the old Section 4, the word 'such' used in the new Section 4 can be taken to qualify goods as of 'like kind and quality' for the purpose of interpretation of Section 4. We observe that the value for assessment purposes under Section 4 is deemed value. Deemed value, being notional in nature by its very nature, need not be of identical goods.
7. We do not find any authority quoted in the Order of the Board as to why Bata brand of goods cannot be treated as such goods as BSC brand. It has rather been conceded that these may be similar goods but goods of different brands manufactured by the same assessee and hence not 'such' goods for the purpose of Section 4. The Board has not gone into the question as to how affixing of brand name changes the character of the goods for the purpose of Section 4. The brand names, as it is, are affixed on the goods to identify the product with the manufacturers. The definition of the Trade Mark which is in the nature of brand name as given in the Trade and Merchandise Act is as under:
"Trade & Merchantile Act- Section (2)- ...(iii) The trade mark means (i) in relation to Chapter 10 (other than Section 81), a registered trade mark or a mark used in relation to goods, for the purpose of indicating or so as to indicate, the connection in the course of trade between the goods, and some person having the right as a proprietor to use the mark (ii) in relation to other provisions of this Act, a mark used or proposed to put to use in relation to goods for the purpose of indicating or so as to indicate a connection in the course of trade between the goods and some person having the right, either as a proprietor or as registered user, to use the mark. With or without any indication of the identity of that person and include a certification of trade mark registered as such under the provision of Chapter 8.
The question, therefore, arises is whether by affixing a different brand name on the goods, held to be similar, having the same retail prices and otherwise qualitatively the same, it would make the goods different for the purpose of Section 4 of Central Excises & Salt Act. Or, in other words, does the affixing of brand name amounts to manufacture of different categories of goods or does the affixing of brand name amounts to manufacture. The Supreme Court, in the case of Government of India Vs Food Specialities Ltd.: 1985 (22) ELT 324 have held that affixing of brand name does not amount to manufacture. Affixing of brand name amounts to manufacture only if Section 2(f) of the Central Excises & Salt Act were to so define the term manufacture. It is only in the context of tobacco and patent and proprietory medicines falling under Section 14E that labelling and relabelling has been stated as process of manufacture. In respect of shoes, however, there is no such definition of manufacture. Therefore by merely affixing the brand name which tantamounts to labelling it cannot be held that a new product has come into existence., A plea has been taken before us that Bata brand and BSC brand of shoes are known commercially as two separate categories of goods and to that extent it should be treated as separate class of goods for the purpose of assessment. No basis has been laid in support of this plea. No market enquiries have been conducted by the Department or any affidavits obtained at the relevant time to establish that in the trade, the two brands of shoes are treated commercially as separate category of goods. As mentioned earlier the affixing of the brand name is for the purpose of identifying the product with the manufacturers and there is nothing on record to show that the people in the trade understand the BSC and Bata brands of shoes as otherwise than being the manufacture of Bata & Company.
8. The commercial parlance criterion as upheld by the Courts in respect of the classification matters whereby the goods are required to be classified based on as to how the goods are known in the trade by those who deal in that product, cannot be extended for the purpose of Section 4 under which the parameters for arriving at the assessable value for the levy of Central duties are clearly set out. Section 4 does not admit of commercial parlance criteria in this regard. Only question to be answered is whether both Bata and BSC goods are "such goods' as Bata brand goods and whether the affixing of brand name amounts to manufacture to make the goods as being of different category. In respect of both as we have held above, the answer is in the negative. In view of the above, we hold that the wholesale price, which is available for BSC brand of shoes is applicable to the Bata brand of shoes for the purposes of Section 4 of the Central Excises & Salt Act. Before parting with the case, we would like to observe that neither appellants nor the respondents have done any exercise in respect of Bata shoes as held by the lower authorities under Rule 6(a) of the Valuation Rules to bring out as to how by accepting or not accepting the value as applicable to BSC shoes either of the two parties are placed at a disadvantage. It may well be if that exercise had been done, the issue may not ' have come up in appeal as neither party might have been at a disadvantage.