Customs, Excise and Gold Tribunal - Delhi
D.C.W. Limited vs Collector Of Central Excise on 22 February, 1990
Equivalent citations: 1991ECR624(TRI.-DELHI), 1991(52)ELT142(TRI-DEL)
ORDER S.V. Maruthi, Member (J)
1. The dispute relates to the assessable value of Hydrochloric acid of the strength of about 30-33%.
2. The appellants manufacture Hydrochloric acid falling under T.I. 14G of the first schedule to the Act. Hydrochloric acid became excisable w.e.f. 1st March 1979. The appellants consumed captively the entire quantity manufactured by them. With effect from 22nd June 1983 they started selling the product to independent buyers, namely Government Undertakings, Industrial establishments, wholesale dealers.
3. During the period from 1-12-82 to 21st June 1983 Hydrochloric acid (HCL) was consumed captively whereas from 22nd June 1983 to 31st December 1985 there was both captive consumption, as well as sale to outside parties. The price at which the HCL was sold to the outside buyers was ranging from Rs. 70/- to Rs. 75/.
4. While so the following six show cause notices were issued proposing to adopt assessable value of Hydrochloric acid of the strength of 30-33% approved for Metture Chemicals, for the HCL manufactured and captively consumed and sold by the appellants, and proposing to recover the differential duty of Rs. 30,31,421-74.
Show Cause Notice No. Date Period Differential duty
C No.V/14G/17-4-82 20-04-83 1-12-82 to 30-4-83 13,541-82
C No.V/14G/17-4-82 05-10-83 1-05-83 to 31-8-83 48,083-91
C. No.V/14G/17-4-82 31-03-84 1-09-83 to 31-1-84 88,415-37
C No.V/14G/17-4-82 23-08-84 1-02-84 to 30-06-84 4,52,951-37
C No.V/14G/17-4-82 23-08-84 1-07-84 to 30-6-85 13,25,163-18
C No.73/1986 8-01-86 1-7-85 to 31-12-85 11,03,266-09
30,31,421-74
5. On receipt of the reply the Asstt. Collector confirmed the demand. On appeal the Collector rejected the contention of the appellants that the price charged at the factory gate to the other class of buyer, namely industrial buyer should be the assessable value in respect of the Hydrochloric acid captively consumed, and directed the Asstt. Collector to determine the assessable value in accordance with Rule 6(b) (i) of the Valuation Rules of 1975. Hence the appeal before us.
6. The main contention of Shri Gujral, learned advocate for the appellants is that the sales in favour of Government undertakings, industrial establishments and wholesale dealers is on the basis of an agreement entered between the appellants and the various parties. The Collector rejected the appellants' plea for accepting the price to the industrial consumers on the ground that the percentage of sales is very low, namely 6.4%. He also submitted that it is now settled that as long as there is factory gate price which is genuine it should be adopted for the purpose of assessment in respect of goods captively consumed. He relied upon Indian Oxygen v. CCE [1988 (36) ELT page. 723], U.O.I. v. Bombay Tyre International [1983 ELT 1896]. He also submitted that percentage of sales is irrelevant in view of the various pronouncements of not only of Supreme Court but also this Tribunal reported in A.K. Roy v. Voltas Ltd. (1977 ELT page.177), Indo National Ltd., Nellore v. UOI (1979 ELT J334), Woodcraft Products Ltd. v. CCE, Shillong [1988(35) ELT page 495], Window Glass Ltd. v. CCE, Calcutta [1989 (39) ELT page 641] Indian Aluminium Cable Ltd. v. CCE [1989 (40) ELT 86] International Computers India Mfg. Co. Ltd. v. CCE [1989 (41) ELT page 287]. Therefore, he submitted that the order of the Collector is liable to be set aside.
7. Shri Naik, learned JCDR appearing on behalf of the deptt. contended that since Rule 6 (b) (i) specifically deals with the value of goods captively consumed the Collector is justified in following the said rule. Since Metture Chemicals is selling at Rs. 323/-MT the assessable value should be on the basis of the said value. He also submitted that Section 4 is not applicable in the case of the goods captively consumed. He further submitted that the appellants themselves declared the value at higher rate i.e. at Rs. 175/-MT earlier to the period in dispute. His further submission is that sales at factory gate being 6.4% is negligible. Therefore, factory gate sales should not be the basis for the purpose of determining the assessable value.
8. Shri Gujral submitted that Metture Chemicals trade in Hydrochloric acid, in other words, they buy from others and sell it in the open market. Therefore, the price is high.
9. The Collector in his order did not dispute the existence of the price at the factory gate. He rejected the same on the ground that the percentage of sales is negligible. It is now settled that once wholesale dealings at armlength are established, the determination of wholesale cash price may not depend upon the number of wholesale dealing.
10. Quantum of goods sold by a manufacturer on wholesale basis is entirely irrelevant. The fact that the said sale may be few or scanty does not alter the true position. (A.K. Roy & other v. Voltas Ltd.). It is also settled that if ex-factory price is acceptable, such ex-factory price shall be the basis for determination of the value under Sec. 4 of the Central Excises and Salt Act. [Indian Oxygen Ltd. v. CCE reported in 1988 (36) ELT 723]. It is also well settled that percentage of sales at factory gate is not a determinative factory. Sales at factory gate as long as they are genuine they shall be the basis of the assessable value. (Woodcraft Products Ltd. v. CCE, Shillong reported in 1988 (35) ELT page 495). It is not disputed that the price at the factory gate is available. It is not the case of the respondent and it cannot also be the case of the appellants that the price available at the factory gate is not genuine as these sales are to the Government undertakings and to the industrial consumers. The department also not disputed that these sales are to the Government undertakings and industrial consumers. Therefore the assessable value in respect of HCL consumed captively should be on the basis of ex-factory price. In Orient Papers v. CCE - [1987 (27) ELT 272] it was held that captive use of paper is akin to that of industrial consumers and hence the price charged to industrial consumers should be the assessable value. Following the above we direct that the Asstt. Collector to determine the assessable value by adopting the price at which the Hydrochloric Acid (HCL) is sold at the factory gate to the industrial consumers.
11. We accordingly allow the appeal and set aside the order of the Collector (Appeals).