Customs, Excise and Gold Tribunal - Delhi
Godrej And Boyce Mfg. And Co. Ltd. vs Collector Of C. Excise on 9 August, 1993
Equivalent citations: 1993ECR481(TRI.-DELHI), 1994(71)ELT429(TRI-DEL)
ORDER P.K. Desai, Member (J)
1. With identical issues involved in all these appeals they are heard together and are being disposed of by this common order 2.1. Appeal No. E/3510/91A as also Appeal Nos. E/575/93A to E/583/93A with E/COD-75/93 to 83/93A are directed against the order-in-Appeal No. SDK/364/B-II/91 dated 17-9-1991 issued under F. No. V-2 (Ch.38)/751/90/3866 of the Collector of Central Excise (Appeals), Bombay, confirming the Order-in-orginal No. V. Ch. 84(30)39/89 dated 26-7-1990 of the Assistant Collector of Central Excise, Bombay II. As these orders are the outcome of ten Show-cause Notices issued, the appellants having initially filed a single appeal (No. E/3510/91A) have chosen to file nine additional appeals (Nos. E/575/93 to 583/93) and as those subsequently filed appeals are filed after the expiry of the period of limitation specified for filing the appeal, the appellants have filed applications (E/COD/75/93 to E/COD/83/93) praying for condonation of delay.
2.2 When only one order-in-original is passed covering more than one Show-cause Notice, it is not necessary to file separate appeals for each Show-cause Notice covered under the same order and a single appeal could be maintainable. The appellants have also filed only one appeal before the Collector of Central Excise (Appeals) and similarly only one appeal could have been filed before the Tribunal. In that case filing of separate appeals is not required. However, when they have chosen to file separate appeals, the same are also being disposed of by this order. Though the original appeal filed is within the specified period of limitation the other nine appeals are beyond the said period and hence, condonation of delay is prayed for. Considering the facts and circumstances and maintaining that such separate appeals are not called for the delay in filing these appeals is condoned. Having orally pronounced the decision at the commencement of hearing of the appeals on merits, for the purpose of record, this formal order is passed, condoning the delay in filing the aforementioned nine appeals E/COD/75/93 to E/COD/83/93A are therefore allowed.
2.3 Appeal No. E/970/92A is directed against the Order-in-Appeal No. KPS/665/B-II/91 dated 3-3-1992 issued under F. No. V-2 (Ch. 84) 242/91/635 of the Collector of Central Excise (Appeals), Bombay confirming the Order-in-original No. V-Ch. 84(30)79/90/4275 of 30-4-1991 of the Assistant Collector of Central Excise, Bombay II.
3.1 The appellants, holders of Central Excise Licence, are engaged in manufacture, amongst others, of Fork Lift Trucks falling under sub-heading No. 8427.00 of the Schedule to Central Excise Tariff Act, 1985, and have been filing price lists as required under Rule 173C of the Central Excise Rules, 1944 under Proforma V as per the provisions of Rule 6(a) of the Central Excise (Valuation) Rules, 1975, from time to time.
3.2 The appellants, in the price-lists so filed were claiming 7.5% as permissible deductions, showing the trucks as sold in retail to individual customers, and indicating price as retail price. From the work orders furnished by the appellants, it was felt that the Fork Lift Trucks were being manufactured as per the specification of the customers with whom the appellant company had entered into contract and the nature of commodity was such that they could not be sold in large number, the price charged ought to be considered as normal whole-sale price, and that price list ought to have been filed in Proforma II as per proviso (1) to Section 4(a) of the Central Excises and Salt Act,1944 and 7.5% claimed as permissible deduction was not admissible.
3.3 Consequent thereto, a notice to show cause dated 29-8-1986 followed by other similar Show-cause Notices, came to be issued to the appellants, calling upon them to show cause why their price list filed in Proforma V should not be rejected and why price should not be computed on the basis of contract price entered into between them and the customers, treating them as separate class of buyers.
3.4 The appellants, in practically identical replies to all the Show-cause Notices, contended that they had been filing their price lists in Proforma V claiming deductions of 7.5% as adjustment, stipulated under Rule 6(a) of the Central Excise (Valuation) Rules, 1975, declaring the price as retail price to the customers and had been arriving at the assessable value and that all their price lists upto April 1986 were approved. They also referred to the letter dated 14-10-1977 from the Assistant Collector of Central Excise, Div. Ill, accepting their claim for 7.5% deduction, and that earlier thereto the price lists were provisionally assessed, but were subsequently finalised accepting the deductions as was evident from the letter dated 20-5-1975. The further contention of the appellants was that even subsequent thereto, the issue was revived and a Show-cause Notice dated 6-6-1984 was issued but the issue was again decided in their favour vide order of Assistant Collector dated 12-12-1984. On merits, they contended that Fork Lift Trucks were not sold to the wholesale dealers, or industrial consumers and their sales could not fall within the purview of wholesale trade as stipulated under Section 4(4)(e) of the CESA, 1944 as the sales were in limited numbers for personal uses and could not constitute sales in course of wholesale trade. According to them, the assessable value could only be determined under Section 4(1)(b) of CESA, 1944 read with Rule 6(a) of the Central Excise (Valuation) Rules, 1975. They also referred to certain decisions and orders from various authorities including the CEGAT.
3.5 Adjudication proceedings were conducted in relation to all the Show-cause Notices. Show-cause Notices dated 29-8-1986, 4-2-1987,20-5-1987, 14-10-1987, 25-2-1988, 25-5-1988, 9-9-1988, 29-3-1989,17-8-1989, and 5-1-1990, demanding differential duty of Rs. 6,14,831.41, Rs. 3,94,400.96, Rs. 8,63,078.38, Rs. 5,64,219.57, Rs. 2,69,657.76, Rs. 6,97,026.18, Rs. 4,54,278.20, Rs. 8,40,034.68, Rs. 4,72,589.00 and Rs. 9,58,635.37 respectively were adjudicated vide Order-in-Original No. V-Ch. 84 (3)/89 dated 26-7-1990 by the Assistant Collector confirming the demands. Show-cause Notice, dated 30-7-1990 raising demand for Rs. 12,94,750.08 was however, confirmed by the Assistant Collector vide his order No. V-Ch. 84(30)/79/90 dated 30-4-1991.
3.6 The Assistant Collector, while confirming the demands, held that the buyers were the industrial consumers, the Government and local authorities, and the sale transactions would clearly tantamount to wholesale trade, vide Section 4(1)(a) of CESA, 1944, and that the sale even of one single item to them could not be considered as retail and the price cannot be construed to be retail price.
3.7 Both the orders-in-original were challenged before the Collector of Central Excise (Appeals), who, vide the impunged orders, (passed by two different Collectors) endorsed the view expressed by the Assistant Collector and rejected the appeals.
4.1 Mr. A. Hidayatullah, the Ld Sr. counsel appearing for the appellants, has submitted that the issue raised is about the proper assessable value of Fork Lift Trucks, which has already stood resolved earlier, upholding the claim of the appellants, and has referred to the earlier orders/correspondence in that regard. Referring to the order-in-orginal No. V. 40(30) 5/76 dated 8-11-1986 of the Collector of Central Excise, Bombay, the Ld. Sr. counsel has submitted that, though in that matter, the point at issue was different, the Collector has made a specific averment that Fork Lift Trucks are sold in retail, which, though may not be taken as the point decided, could certainly be construed as endorsing the findings already given earlier. Pleading that, with the issue having already stood decided as early as 1976 and again in 1984, it is not open to the department to raise an issue over again, the Ld. Sr. Counsel has submitted that even on merits, the appellants are justified in treating the sale of Fork Lift Trucks as retail and are eligible to get the deduction of 7.5% and have been correctly filing their price-lists in Proforma V. 4.2 Elaborating the contention, the Ld. Sr. Counsel has pleaded that the conclusion drawn by the authorities below is based on the nature of goods, whereas, the criteria applicable has been to consider the nature of transaction, when the question arises as to whether the transaction is in the nature of wholesale or retail. He has then referred to the decisions of the CEGAT in Collector of Central Excise v. Escorts Ltd. 1988 (33) E.L.T. 147 (Tribunal), Modi Zerox Ltd. v. Collector of Central Excise, 1989 (40) E.L.T. 481 (Tribunal) and Collector of Central Excise v. Indian Communication Network Ltd., 1989 (41) E.L.T. 643 (Tribunal) to substantiate his submission and has also referred to the decision in Collector of Central Excise v. Voltas Ltd., 1987 (27) E.L.T. 718 (Tribunal) where sale of Fork Lift Trucks manufactured by other manufacturers and sold in the same mode and manner as the one undertaken by the appellants, has been accepted as the transaction in retail sale. The Ld. Sr. counsel has then submitted that the word "Wholesale trade" has been duly defined vide Section 4(4) (e), and has pleaded that the same has already been interpreted in the decisions referred to, and that going by that, the subject transactions have to be held as not in "Whole-sale trade".
4.3 By way of an alternate submisssion, without prejudice to their main contention, the Ld. Sr. Counsel has pleaded that if the sales are taken as in the nature of the "wholesale trade" then the appellants would become eligible to all the permisssible deductions in relation thereto, and that directions to that effect should be issued.
5. Mr. Prabhat Kumar, the Ld. Sr. S.D.R., while supporting the order, has submitted that for the purpose of arriving at the assessable value, the basic provision exists in Section 4 of the CESA, 1944, where, besides defining as to what is meant by "wholesale trade" criteria is laid down in Section 4(1) (a) of the Act as to what, should be deemed to be the value. In his submission undisputedly each Fork Lift Truck is manufactured under a written works contract. Referring to the evidence on record the Ld. SDR has pleaded that where more than one trucks are supplied the price for each truck remains the same, and thus sale under each works contract would be termed as "Wholesale" transaction". The Ld. SDR has then pleaded that it is not essential that for the purpose of holding the transaction as "Wholesale trade" the sale ought to be only to the dealers, as the definition also covers up other buyers besides, industrial consumers and the Government. This, according to the Ld. SDR, indicates that the word "Whole-sale Trade" carries a specific distinct meaning for the purpose of recovery of appropriate duty, and hence, the ordinary dictionary meaning could not be resorted to. He then referred to the decision of the Andhra Pradesh High Court in Mopeds India Ltd. v. Assistant Collector, 1984 (18) E.L.T. 249(A) to plead that a thin line exists between the two types of transactions, and when the nature of transactions leans in favour of showing them to be in the nature of "wholesale trade", the stand taken by the Revenue may be accepted.
6. Considering the submissions made and perusing the evidence brought on record, it appears that on replacement of Section 4 of the CESA, 1944 by the one as it now exists, with effect from 1-10-1975, the question of approval of price lists filed by the appellants in relation to Fork Lift Trucks, came up for consideration, and the Assistant Collector of Central Excise, Valuation and Classification, Cell, wrote to the Assistant Collector, Bombay III, vide his letter No. V(V-Cell)17-ll/76/784 dated 20-5-1976 to approve the price lists allowing margin of 7.5% It appears that thereafter, also, the appellants filed price list in Proforma V showing the sale of Fork Lift Truck, as retail transaction but claimed deduction higher than 7.5% and hence a Show-cause Notice dated 30-8-1976 was issued. However, the appellants subsequently accepted avail-ment of deduction at 7.5% and hence, vide letter No. PG/FT&PT/R. 11/75/13118 dated 14-10-77, the said notice was withdrawn. There is nothing on record to show that any dispute as to the transaction being other than retail sale was ever raised at that time, though it appears that the price lists filed were in Proforma V (meant for retail transaction). However, a notice to Show-cause was issued on 6-6-1984 followed by two other such notices dated 12-6-1984 and dated 17-10-1984, and preceded by a notice dated 27-1-1984, alleging that the price lists which were filed in Proforma V ought to have been filed in Proforma II, on the basis that customers could be taken as separate class of buyers and price charged as whole-sale price, and that the deductions were not permissible. Differential duty was demanded. The Assistant Collector of Central Excise, Div. IV, Bombay II, however, vide his Order-in-Original No. V-CIVL/34B/G & B/IV/83/15310 dated 12-12-1984, discussing the plea concluded :-
"Keeping in view the above facts, I am inclined to hold that the sale of Fork Lift Trucks effected by the company is in the nature of retail sale and the prices declared in Proforma V @ 7.5% permissible deduction is correct."
He has then passed a final order accordingly. Nothing is brought on record to show that the said Order-in-Original has been ever appealed against. On the contrary averments in the impugned Order-in-Original indicates that the aforesaid order has not been appealed against, but series of Show-cause Notices have been subsequently issued raising practically the same issue, which have resulted into the present proceedings. Again, during the scrutiny of the price list, in relation to various manufactured products of the appellants, a dispute as to proper valuation arose in relation to supply to dealers and Fork Lift Trucks also figures thereunder. The Collector of Central Excise, Bombay however, vide his Order-in-Original No. V-40(30)5/76 dated 8-11-86, holding that the price charged to the sub-dealers would be taken as the basis of assessment, has made the endorsement that :-
"This order will apply to all products of the company other than Fork Lift Trucks, since the sale pattern for all goods is identical. (Fork Lift Trucks are sold directly in retail)".
This also indicates that the retail nature of the transaction is subsequently accepted even at the level of the Collector of Central Excise.
7. With the issue having already stood decided and accepted by way of not challenging the same by approaching the appellate authority, the subsequent notices issued raising the same grounds on which earlier adjudication proceedings and order passed thereunder, had assumed finality, could as well be rejected ex facie as not sustainable, as principle of res judicata would come into play. The impugned Show-cause Notices do not raise any ground other than the one raised in the earlier Show-cause Notices adjudicated upon vide Order-in-Original dated 12-12-1984. However, when the earlier decision was brought to the notice of the adjudicating authority, in the impugned order, he has brushed that aside by observing :
"The assessee's argument that reviewing again the same matter is not correct as the then Assistant Collector has decided the matter vide his Order No. V-CLVL/34/B G&B/IV/83/15310 dated 12-12-1984, is not acceptable to me as the period involved is different and as a quasi-judicial authority, the decision arrived at by my learned colleague is not binding upon me."
To say the least, the approach is totally misconceived from any probable angle of vision. The order passed by the predecessor in office, also is an order from a quasi-judicial authority, and the adjudicating officer, being an officer of the same rank, is bound by the same, irrespective of the fact, whether he differs from that. Judicial discipline requires him to do so. Further, merely because the period of demand is different, there could be no alteration in the approach, as the basis for raising the demand remains the same, on which a decision is already taken earlier by the competent authority, and which has assumed finality by virtue of not preferring any appeal. The approach of the adjudicating authority has to be deprecated not only from the point of view of judicial discipline but also from the point of view of larger interest of the industry, which having once got the issue resolved ought to feel assured that, the same issue would not be re-opened time and again. The Excise officers are certainly expected to be vigilant and attempt at checking duty evasion, but that could not permit them to do so by any manner that they deem fit.
8. As the matters have also been argued at length on merits, and as the Order-in-Original dated 12-12-1984 does not deal with the issue in details, and as it appears expedient to bring an end to the controversy that is being raised, the entire issue is being taken up for examination and the findings are being given thereon.
9.1 The issue raised for determination is whether the sale of fork lift trucks could be considered as the wholesale trade. The authorities below have concluded that the buyers being industrial consumers, Government, local authorities etc., sales amount to wholesale trade vide Section 4(4) (e) of the CESA, 1944.
9.2 Section 4(4)(e) of the Act defines :-
"Wholesale trade" thus:
"Wholesale trade" means sales to dealers, industrial consumers, Government, local authorities, and other buyers who or which purchase their requirements otherwise than in retail".
The Tribunal has, in Collector of Central Excise v. Escorts Ltd., 1988 (33) E.L.T. 147 dealt with the word "Wholesale" and "Retail" as understood in various foreign countries, and has considered the definition of wholesale trade, given under the CESA,1944, and has concluded :
"From the diverse material reproduced by us above, it can be considered that the wholesale sales as distinct from retail sales, are those which are made to :
(1) Dealers who resell the goods to others, (2) Industrial consumers or jobbers who use the goods in the manufacture of other goods and sell those other goods, and (3) Institutions or bulk users who buy in bigger lots for their own commercial use as distinct from an industrial consumer buying goods for personal or family use."
9.3 Even re-reading the definition, reproduced hereinabove it means sale to a dealer (who in turn sells in retail to the consumer) or sale to individual consumers, Government or local authorities or other buyers, but that has been qualified by the words "who or which purchase their requirements otherwise than in retail". These words obviously go with the purchase in question, e.g. purchase of stationery for Government offices, or foodgrains for kitchens or Guest Houses run by the Government, local authorities or industrial houses, but could not stand attracted to the individual items which are not intended to be purchased "in bulk". The definition cannot and is not intended to be read as meaning that whatever item that the parties/institutions referred to, purchase, should be deemed to be in the nature of wholesale trade.
9.4 The Tribunal also had an occasion to deal with the issue as to what could be the wholesale trade, in Modi Zerox Ltd. v. Collector, 1989 (40) E.L.T. 481 (Tribunal), where the item concerned was photo copier machine, and the Tribunal observed that such machines would be used in various offices only, whether in Government or private sector and could not be considered as industrial raw material and a mere direct sale could not constitute a wholesale transaction. In the said matter, each such machine was separately sold. Reliance however was placed on the decision in Re: Escorts Ltd. (supra).
9.5 In Collector of Central Excise v. Indian Communication Network Ltd., 1989 (41) E.L.T. 643, also the same issue has been examined, and it is held :
"Respondents are selling their products to industrial consumers, government. The Department's contention that since the item is a high technology product, which is also very expensive and, therefore, not ordinarily sold in large number, therefore such transaction should be treated as wholesale, is far fetched. What we have to look at is not the nature of the product but the nature of the transaction. The simple point to be looked into is whether sale is wholesale or is retail. Wholesale sales are sales to dealers who re-sell the goods to others. The sales may even be made to industrial consumers who use the goods in the manufacture of other goods or the sale may be to institutions or bulk users who buy in bigger bulk for their own commercial purpose."
9.6 Sale transactions of Fork Lift Trucks, themselves, were under consideration before the Tribunal in Collector of Central Excise v. Voltas Ltd, Bombay, 1987 (27) E.L.T. 718 (Tri.). In the said order, they have referred to Para 19 of the order of the Tribunal in Collector of Central Excise v. Madras Rubber Factory Ltd., 1984 (18) E.L.T. Ill, where it is held that the concept of resale to the consumers is inbuilt into "whole-sale" as opposed to retail sale, and have concluded that the "sale" of Fork Lift Trucks to individual consumers has to be construed as retail sale. The facts of the said matter appear to be identical to those here.
9.7 From the decisions referred to above, as also considering the definition of the word "whole-sale trade" given in Section 4(4)(e) of the Act, the whole-sale trade has to be understood as the one, where the element of further sale to other persons is involved, or where the purchase is by those specified, namely, industrial consumers, Government, local authorities and other, if they are purchasing the items under consideration "in bulk" and not as a retail purchase. What could be considered as purchase in bulk or "otherwise than in retail", has already been explained herein above.
10.1 Considering the factual position in the present set of appeals, undisputedly, there is no sale to any dealer. It is not the allegation from the department that any of the customers under consideration has purchased the trucks for effecting any further sale. They all appear to have purchased them to be used in their normal activities, and the nature of transaction between the appellants and the consumers clearly indicates the sale in the nature of retail sale. Various invoices and contracts have been produced subsequent to the hearing. They are however not examined in depth as the Ld. SDR has no opportunity to comment upon them. But going by what has been virtually an admitted position, the separate sale transactions have been entered into with each individual consumer, at the price negotiated and with modifications supply of extra accessories as desired by each one of them. These are the major criteria which exist in the retail transactions and are generally absent in the wholesale trade, where general requirements of the consumers at large, as against specific requirements of each individual consumers, are considered. The sale transactions, therefore, provide clear indication of the sales being in the nature of retail sale.
10.2 Some of the customers have purchased more than one truck, but merely on that count, the sale cannot be construed to be in the nature of whole sale trade. In such cases also the essence of the transaction remains to be of the retail nature.
11. In the result, therefore, notwithstanding the earlier determination of the issue in the case of present appellants themselves, even independently examining the issue in the light of the interpretation as given, and which even otherwise is obvious, to the word "whole-sale trade" and considering that what is not a transaction in the "whole sale trade" is the one under "retail trade", subject transactions have to be held as those in "retail trade". The finding given by the authority below therefore, cannot be upheld and is, therefore, set aside.
12. When the sales have been accepted as in the nature of "retail sale" and when eligibility of deduction at the rate of 7.5% has already stood approved, the issue of re-consideration of the assessable value, as wholesale price, and demanding differential duty accordingly, does not arise, and hence, the demand raised also cannot be sustained and is therefore set aside.
13. In the result, the appeal is allowed, and the order passed by the authority below is set aside. Consequential reliefs if any, to follow.