Customs, Excise and Gold Tribunal - Delhi
Bhartia Electric Steel Company Ltd. vs Collector Of C. Ex. on 5 September, 1988
Equivalent citations: 1989(19)ECC56, 1988(19)ECR251(TRI.-DELHI), 1988(38)ELT169(TRI-DEL)
ORDER K.L. Rekhi, Member (T)
1. The appellants were working under valuation procedure prescribed in exemption Notification No. 120/75-Central Excises, dated 30-4-1975 and paying duty on the basis of their invoice value. They manufactured bogies and supplied them to the Indian Railways. The Wheels and Axles used in the bogies had been supplied to the appellants free of cost by the Railways. The appellants did not include the cost of Wheels and Axles in their invoice value on the basis of which they had assessed the Central Excise duty. The lower authorities have held that the cost of Wheels and Axles, which formed part of the bogies, was includible in the assessable value and hence they have confirmed the demand for differential Central Excise duty amounting to about Rs. 6,800/-.
2. The appellants relied on the judgment of the Hon'ble Calcutta High Court in the case of . Burn Standard Co. v. Union of India -1988 (17) E.C.R. 737 (Cal.) according to which the cost of materials and components supplied free by the customer need not be included in the assessable invoice value under Notification No. 120/75-C.E.
3. The Ld. Representative of the department relied on the judgment of the Hon'ble Supreme Court in the case of . Empire Industries Ltd. - [1985 (20) ELT 179 (S.C.)], paragraph 47, according to which the value for assessment of Central Excise duty is the full intrinsic value of the Article, inclusive of the cost of the materials and components supplied free by the customer. The Ld. Representative of the department urged that this judgment of the Hon'ble Supreme Court had not been brought to the notice of the Hon'ble Calcutta High Court in the Burn Standard Co. case aforesaid and, therefore, the Calcutta High Court judgment was per incuriam of the High Court judgment and, therefore, not binding.
4. We have given the matter our earnest consideration. The Ld. Representative of the department is right when he says that the principle of valuation as laid-down in paragraph 47 of the judgment of Hon'ble Supreme Court in Empire Industries Ltd. case aforesaid is binding. We also note that this judgment of the Hon'ble Supreme Court was apparently not brought to the notice of the Hon'ble Calcutta High Court. The Article which the appellants manufactured and cleared and which was the subject of the charge of Central Excise duty was a bogie fitted with Wheels and Axles. But the invoice issued by the appellants was not for the complete bogie but for the bogie minus Wheels and Axles. The invoice value was, therefore, not of the complete Article chargeable to duty. According to the terms of the contract between the Railways and the appellants, the Railways, in addition to paying the price as per invoice, were to supply Wheels and Axles free of cost. Condition number (iv) of Notification No. 120/75-C.E. required that the invoice value should be full commercial price of the Article. This condition was not satisfied since the price in the invoice issued by the appellants was of the incomplete bogie, that is, bogie minus Wheels and Axles while the Article manufactured and cleared by them and which was chargeable to duty was a complete bogie. According to the judgment of the Hon'ble Supreme Court in the Empire Industries case - full intrinsic value of the bogie as cleared by the appellants was to be assessed to duty.
5. In the circumstances, we uphold the lower orders and dismiss this appeal.