Customs, Excise and Gold Tribunal - Delhi
Madhavnagar Cotton Mills Ltd. vs Collector Of Central Excise on 28 May, 1986
Equivalent citations: 1986(9)ECC55, 1986(8)ECR444(TRI.-DELHI), 1986(25)ELT443(TRI-DEL)
ORDER K.L. Rekhi, Member (T)
1. On hearing both sides, we observe that the appellants received the impugned order on 9.9.1985. As per the postal receipt, their appeal Was received in the Registry on 9.12.1985, i.e. within the prescribed period of three months. The appeal being in time, the application for condonation of delay is, infructuous and is dismissed as such.
2. We then heard both sides on merits of the case. We find that the appellants manufacture cotton fabrics. Among their customers,, there are five industrial customers who require fabrics of a particular sort, quality and construction for their respective industrial use. Such fabrics are manufactured by the appellants against specific contracts entered into with these customers and are supplied exclusively to the respective customer. Some customers, like M/s. Leauko Plast, require that the fabrics to be supplied to them should be thoroughly checked, meter by meter, before delivery. The appellants arrange such checking and realise special checking charges (a) 25P to 50P per meter from such customer. In the case of other industrial customers, the appellants say that they manufacture the required special quality fabrics in lots of minimum, twenty thousand moters. But these customers buy only a small quantity at a time. The rest, of the quantity keeps lying in the appellants' factory. The appellants realise interest charges for holding the stock from such customers. The appellants were recovering special checking charges and interest; from the respective customers under the label "holding incidental charges" but they did not declare these charges in their price lists filed with the Central. Excise authorities. The authorities discovered these charges on checking the appellant's sale bills. The lower authorities have held that these charges are includible in the assessable value of the special quality fabrics supplied to the respective customers.
3. The appellants' argument is that, holding incidental charges were for some exceptional services rendered to the particular industrial customers and were not a part of the normal price of cotton fabrics. We do not agree with them. It is not a case where the same sort, quality and construction of fabrics is supplied to a large number of other customers at a lower price. In fact, the other customers are not interested in the particular sort/quality manufactured for the respective industrial customer. Therefore, there is no question of the price charged for that special sort/quality being an exceptional price. This is so for the simple reason, that there is no other normal price for that sort/quality.
4. Secondly, the holding charges for the stock held by the appellants in their factory store-room are nothing but interest on working capital employed by them in their factory. It is not a charge which the customer has to pay for late payment after receiving delivery of the goods. Similarly, in the case of Leauko Plast, the cost of special checking is nothing but labour charges for ensuring that flawless quality of the fabric as stipulated in the contract is delivered to the customer. The charges in question, in both cases, are part of the total cost of manufacture. Further, these charges are incurred before delivery of the goods is effected at the factory gate. The lower authorities were, therefore, correct in holding that these charges are includible in the assessable value.
5. Accordingly, we reject this appeal.