Customs, Excise and Gold Tribunal - Mumbai
Rashtriya Chemical And Fertilizers ... vs Commissioner Of Central Excise on 12 April, 2006
ORDER K.K. Agarwal, Member (T)
1. The appellants are engaged in the manufacture of chemicals and fertilizers. During the course of manufacture Phosphogypsum and Calcium Carbonate are generated as waste products. These waste products are stored in a pond adjacent to the manufacturing area. These waste products were sold by the appellant by inviting open tenders. The conditions of the same inter-alia, has been "as is where is basis".
2. The appellant paid excise duty on the said contract price as was followed by them previously when the excise duty was leviable on ouch waste products. The department thereafter raised objections to such method of determination of assessable value and assessment in the year 2000. The department's contentions was that even though as the sale is on "as is where is" basis and the loading charges of such washer products were borne by the contractor, the cost of such loading charges ought to have been included in the assessable value of the waste products. Accordingly they were asked to pay differential duty for he period 1-3-1997 to 31-8-2000 amounting to Rs. 32,36,535/-". The appellant paid the duty on loading charges on 29-9-2000. However, they were issued a show cause notice on 15-1-2001 alleging that they had mis-declared to the department that no additional consideration was flowing directly or indirectly and also suppressed the fact of other consideration that these loading charges are paid by the buyer to the labour Contractor i.e. railway Labour Board in lieu of the loading charges incurred within factory premises and wilfully neglected to indicate such loading charges to arrive at the normal wholesale price for computing the assessable value as per Section 4. The show cause notice was adjudicated by the Commissioner who confirmed the duty liability of Rs. 32,36,535- and ordered recovery of the interest amounting to Rs. 14,27,308- and imposed penalty of Rs. 5 lacs under the provisions of Section 11 AC of the Central Excise Act, 1944.
2. The Learned advocate for the appellant submitts that it is a settled position of the law that in case of written contract price arrived should be accepted as correct and final. The products in question were sold on "as is where is "basis and the price arrived at after inviting tenders and same is to be considered as the transaction value. There is no flow back of any of amount in addition to the contract price received from the buyer and therefore the question of adding any loading charges does not arise. They placed their reliance on the decision in the following cases.
a) CCE. Aurangabad v. Kada S.S.K. Ltd. .
b) OCP India Pvt. Ltd. v. CCE & C. Bhubaneshwar .
c) Pace Marketing Specialities v. CCE .
d) CCE v. Godavari Manar SSK Ltd. .
3. On limitation it was submitted that the appellants have been clearing these products from the very inception of the company on the same terms and conditions and they had filed price list from the year 1989 and 1998 which have been approved by the department and their price list clearly indicated that the goods are sold on "as is where is" basis and the copy of the contract was also furnished to the department. In view of this the demand cannot be raised for extended period and cited the Supreme Court decision in the case of Asst,. Collector of Central Excise Bombay v. Mahindra & Mahindra Ltd. and Shah Wallace Co. Ltd. v. CCE Kanpur in support thereof.
4. As regards penalty it was submitted that the appellant has paid the duty before the issue of show cause notice and therefore the penalty under Section 11AC is not sustainable in the light of the decision of Larger Bench in case of CCE, Delhi v. Machine Montell and Bombay High Court in case of Gaurav Mercantile v.CCE . It was submitted that the initially the penalty imposed was Rs. 5 lacs which by issue of corrigendum was raised to Rs. 32,36,535. Such issuance of corrigendum having material effect on the order is legally not sustainable and cited certain decisions to that effect.
5. As regards the interest, since the duty has been paid before the issue of the show cause notice no interest is chargeable as held by the Tribunal in the case of E.I.D. Parry India Ltd. v. CCE .
6. The Learned S.D.R. on the other hand submitted that the contract price did not include the loading charges and since the goods were loaded from within the factory premises the same are includable in the assessable value and cited the Supreme Court decision in the case of Indian Oxygen Ltd. v. Collector of C.E. wherein it was held that so far as the loading charges incurred for loading the goods within the factory are concerned they are to be included in the assessable value irrespective of the fact who has paid for the same but the loading charges incurred outside the factory gate are excludible.
7. On limitation it was submitted that non filing of the correct price declaration is wilful misrepresentation as has been held by the Madhya Pradesh High Court in the of Procter & Gamble Hygiene & Health Care Ltd. v. Commissioner C.Ex. .
8. We have considered the submission of both the parties. We find that even though the goods were sold on contract basis the contract did not represent the full value of the goods in as much as loading charges were to be incurred by the customer even though the goods were to be lifted from within the factory premises. As held by the Honourable Supreme Court in the case of the Indian Oxygen Ltd. the loading charges if incurred within the factory premises are to be included in the assessable value irrespective of the fact whether it is incurred by the buyer or the seller. The Tribunal decisions cited by the appellant are not relevant as they related to the contract price stating that once the contract is entered into on the principal to principal basis the same has to be considered as the transaction value. In another decision certain testing was carried out by the Railway on their own and such notional charges which were not really incurred were not allowed to be added However, in case of Siemens Ltd. v. Commissioner 2004 (176) E.L.T. 299 (Tri) it has been held that the loading charges incurred before the goods leave the factory gate that is place of removal, even though borne by the buyer have been rightly included for arriving at the assessable value. We accordingly held that the duty is payable on the loading charges.
9. As regards the limitation we find that the appellants have been submitting price list even during the period when their goods were dutiable and have clearly indicated that the prices were " as is where is " basis. They have indicated separate prices in respect of clearance pond on "as is where is basis" and other where the goods were loaded into the wagons ex-factory. For the same product the price in respect of the delivery into the wagon was considerably higher than the expend price. In view of this the matter was fully in the knowledge of the department that the price charged by them did not include the loading charges. In view of this it cannot be held that there has been any suppression of facts on the part of the appellant and therefore extended period cannot be applied. The demand will therefore be limited to 6 months prior to issue of the show cause notice which comes to Rs. 3,62,165/-.
10. As regards penalty and interest since it has been held that there is no suppression of facts and misrepresentation on the part of the appellant and the fact that the entire duty was paid before the issue of show cause notice the question of imposing of any penalty and charging interest does not arise in view of the decision cited in the case of Machino Montell cited supra
11. Accordingly both the penalty and demand of interest are set aside.
12. The appeal is allowed in above terms.
(Pronounced in Court)