Customs, Excise and Gold Tribunal - Delhi
C.C.E. vs Allied Textile Leather Inds. on 22 April, 1996
Equivalent citations: 1996(86)ELT522(TRI-DEL)
ORDER Lajja Ram, Member (T)
1. This is an appeal filed by the Revenue being aggrieved with the order-in-appeal, dated 13-4-1982 passed by the Collector of Central Excise (Appeals), Bombay who had held that as the prices charged by the respondent M/s. Allied Textile Leather Inds., Ah-medabad were fully commercial, they were eligible for the exemption under Notification No. 120/75-C.E., dated 30-4-1975. The case had chequered history. The respondents were engaged in the manufacture of Leather pickers falling under Item No. 68 of the Central Excise Tariff and were availing of the exemption under Notification No. 129/75-C.E., dated 30-4-1975. Initially, a show-cause notice was issued by the Supdt. of Central Excise denying the benefit of Notification No. 120/75-C.E., to the assessee. This show-cause notice was confirmed by the Asstt. Collector. They had filed a writ petition in Gujarat High Court which had remanded the matter to the Asstt. Collector. In fresh proceedings, the Asstt. Collector agreed with the contention of the manufacturers that the prices charged were fully commercial. This order of the Asstt. Collector was confirmed by the Collector of Central Excise (Appeals), Bombay.
2. The Revenue had come in appeal against this order on the ground that the goods were sold to one customer M/s Bhatt Bros, under an agreement which stipulated that the said Bhatt Bros, will not charge more than 12% of the profit from the customers. The Revenue had contended that as the goods were being sold in the open market at prices higher by 12% than the value approved the benefit of Notification No. 120/75-C.E., was not available as this relationship and agreement had influenced the price.
3. The matter was posted for hearing on 22-4-1996. Shri G.D. Sharma is present for the appellant/revenue. No one is present for the respondent. A notice for today's hearing had been issued to the respondent on 22-3-1996. There is no response.
4. Shri G.D. Sharma, ld. JDR submitted that as the entire goods were sold to one customer with whom the manufacturers were bound by an agreement, it could not be said that the prices were not influenced by this special relationship between the manufacturer and his sole buyer.
5. We have carefully considered the matter. Exemption Notification No. 120/75-C.E. dated 30-4-1975 is an exemption notification and provides exemption to the duty determinable on the basis of the invoice to the extent the Section 4 value is higher than the invoice value. The Hon'ble Supreme Court in the case of Texmaco Ltd. v. Collector of Central Excise, Calcutta as reported in 1995 (77) E.L.T. 501 (SC) had held that the Section 4 value could be higher than the invoice value and in case, the invoice value is the genuine value actually charged by the manufacturer from his customers then the exemption could not be denied on the ground that Section 4 value could have been a higher value. The Hon'ble Supreme Court had gone to the extent that in case of free supplies by the customers, the cost of such free supply was not includible in the assessable value of the products manufacture out of the such free supplies.
6. In this case we are concerned with the goods falling under Item No. 68 of the old Central Excise Tariff and there is no dispute that the respondents were eligible to avail of the exemption under Notification No. 120/75-C.E. There is a clear finding given by the Asstt. Collector that the price charged was fully commercial. This finding had been confirmed by the ld. Collector of Central Excise (Appeals), Bombay. We find that no grounds have been adduced by the Revenue to controvert this situation.
7. The stipulation in the agreement that the customer will not charge more than 12% of the profit and will not make the manufacturer ineligible to the exemption under Notification No. 120/75-C.E. unless it could be established by cogent reasons that the relationship was not commercial. Thus, to our view this stipulation could not be taken as to influence the price particularly in view of the fact that there is clear finding that the price actually charged was a fully commercial price.
8. Taking all the relevant considerations into account, we find no infirmity in the order-in-appeal and consequently the appeal filed by the revenue is rejected accordingly. Ordered accordingly.