TMI Blog1999 (3) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant,reportedly by oversight, failed to declare those higher revisions to the Excise department leading to lesser payment. Department has treated the entire excess realisation in prices on sale of tyres as assessable value and claimed short payment of duty. 1.3On the other hand, the appellant contends that the excess realisation made by it in sale prices of its tyres during the relevant period included the element of duty. Therefore, that duty element included in those excess realisation should be abated from the said excess realisations and on the balance amount, duty should be charged in accordance with the principles laid down in Section 4(4)(d)(ii) ibid. 1.4S.Z.B. found that there was a divergence of opinion on the aforesaid question. It noticed the following judgments in favour of deduction of duty element from the prices at which excisable goods were sold. 1986 (23) E.L.T. 48 (Kar.) [M/s. Mangalore Chemicals(i) Fertilizers Ltd.] 1987 (29) E.L.T. 830 [(ii)M/s. Ashok Leyland] 1994 (71) E.L.T. 1053 (Tribunal) [(iii)Pieco Electronics Electricals Ltd.] 1993 (49) ECR 126 (Tribunal) [(iv)Byco International Others v. CCE] 1990 (50) E.L.T. 410 (Tribunal) [(v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise payable on such goods under this Act; and the aggregate of the(b) effective duties of excise payable under other Central Acts, if any, providing for the levy of duties of excise on such goods, and the effective duty of excise on such goods under each Act referred to in clause (a) or clause (b) shall be - in a case where a notification or order providing for any(i) exemption (not being an exemption for giving credit with respect to, or reduction of duty of excise under such Act on such goods equal to, any duty of excise under such Act, or the additional duty under Section 3 of the Customs Tariff Act, 1975 (51 of 1975), already paid on the raw material or component parts used in the production or manufacture of such goods) from the duty of excise under such Act is for the time being in force, the duty of excise computed with reference to the rate specified in such Act in respect of such goods as reduced so as to give full and complete effect to such exemption; and in any other case, the duty of excise computed with(ii) reference to the rate specified in such Act in respect of such goods." 5.1First and foremost controversy is whether the total price realisation made by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid as duty could he deducted from the s.p. of Rs. 110/- and not the higher element of duty @ 20% ad valoram. 6.1Assessees' contention, on the other hand, has been that the price-realisation including duty, if any made by them on sale of their goods to their customers is the total cum-duty price. In terms of contracts or sale agreements entered into between an assessee and a customer, no further recovery of any element of price on account of increased liability towards duty proposed to be fastened by the department on an assessee is possible to be made from their customers. Initial price realisation including duty, if any, on sale of the goods, is all what an assessee has obtained by way of whole sale price of the goods. What higher duty or some duty is payable has to come only from this price realisation in terms of Section 4(1)(a). It is purely a hypothetical consideration to urge, as done by the Revenue that an assessee would have passed on the higher burden, on account of subsequent duty proposed to be imposed by the department. Department is legally bound to abate the duty element, in terms of its subsequent proposal and confirmation thereof, from the sale-price (including d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lised sale-price on the proposal to charge duty subseaqently. It is, therefore, submitted that the ratio of Apex Court's judgment in Bata India has no application in the present cases before us. 7.2It is also submitted that Bata India in the first para of its report 84 E.L.T. 164 (S.C.) starts on the premise. "There can be no dispute that if the assessable value calculated according to Section 4 of the Central Excises Salt Act, comes upto or below the limit set by the notification the assessee will be entitled to the benefit of the notification". Again in para 6 of the said report, it is stated that "normal wholesale price is the cum-duty price which the wholesaler has to pay to the manufacturer. It is only because the wholesale price is ususally the cum-duty price that sub-section (4)(d)(ii) lays down that value will not include duty of excise, sales tax and other taxes, if any, payable on the goods ..........". He submits that relying on Bata India (supra), Tribunal in the following judgment has held that duty payable subsequently has to be deducted from the initial cum-duty price realisation. (1)CCE v. Pawan Tyres (P) Ltd. - 1997 (93) E.L.T. 635 (Tribunal) = 1997 (19) R.L. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the element of excise duty has to be deducted in order to arrive at the assessable value. This understanding is in accordance with the decisions of the Supreme Court and High Court of Karnataka referred to above. In these circumstances, we are bound to follow the interpretation given by the Supreme Court and the High Court of Karnataka in the aforesaid decisions and not to follow the decisions of the Tribunal taking a contrary view. Department's case is not that over and above the price collected by the appellant from the buyers element of excise duty has been collected. Excise duty was not collected by the appellant since there was no intention to pay duty. In the present case, duty was paid though under protest before the show cause notice was issued. While, determining the assessable value for the purpose of show cause notice, element of duty should have been deducted in arriving at the assessable value. Even in cases where payment has not actually been made though duty is payable, the same is deductible in terms of the specific language used in Section 4(4)(d)(ii) of the Act. Duty is payable whether actually paid or not. The State should take all steps to collect whenever it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issed by the Apex Court as reported in 1997 (90) E.L.T. A 58. 8.1.Learned Joint CDR Smt. Dolly Saxena, on the other hand, has reiterated that only the actual duty, if any, included by an assessee at the time of sale of the excisable goods, should be deducted. Deduction of higher duty subsequently demanded is not warranted because the higher duty did not form part of the initial price at which the goods were sold. She submits that Tribunal's reasoning in Auto Industries (supra) is correct and should be adopted. 9.1We have carefully considered the pleas advanced from both sides, assessable value is required to be determined in terms of Section 4 of the Act. Sub-section 4(d)(ii) envisages deduction of aggregate effective duty payable on the goods under the Act, and all other Acts, if the wholesale price at which goods are sold includes all such excise duties. Wholesale price is the total consideration received by an assessee against sale of excisable goods in wholesale trade. Wholesale price will include the element of duty payable on any goods because such duty forms part of the consideration for sale of the goods according to terms of sale of the goods. If any further demand of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, on verification of the invoices/stock transfer notes of M/s. Srichakra Tyres Ltd. it was detected that during the period December, 1991 to September, 1992, the appellants had charged and collected extra amount over and above the value declared in their price lists. Total additional consideration received was found to be Rs. 3,77,254.41. The appellants had admitted that they had revised their prices without any declaration to the Department on two occasions and that they had not paid the differential duty arising out of such revisions. They had however, contended that the revised higher price not declared to the Department should be taken as the cum-duty price, and the assessable value should be re-determined taking the revised prices as cum-duty prices. The Collector of Central Excise, Madurai, who had adjudicated the matter observed that the extra money collected by the assessee was necessarily to be treated as additional money consideration received by the assessee and that the extra money collected was to be included in the assessable value for determining the actual duty liability. He had observed that this position was explained to the assessee's representative at the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty would not arise (refer para 3 of the judgment). In para 5, it is recorded as under :- "Mr. Shanti Bhushan has contended that if excise duty is payable on these shoes, then the duty element has to be deducted from the wholesale price in order to ascertain the assessable value under Section 4." In para 6, the Hon'ble Supreme Court ruled that they were unable to up-hold that contention "because the normal price charged by the manufacturer at the time and place of removal of goods to the wholeseller is treated by the Act to be the value of the goods. Sub-section (1) (a) of Section 4 makes it clear that such value shall ....................... be deemed to be the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade............'. Therefore, the normal wholesale price of the goods must be deemed to be the value of the goods". The Hon'ble Supreme Court held that "there cannot be any question of deduction of duty payable on the goods from the wholesale price because as a matter of fact, no duty has actually been included in the wholesale price" (refer para 6). In para 8, the Apex Court ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the debit notes and accounts were contradictory. The term regarding requirement of payment of such extra amount was conceived in secrecy and was indicated in secret code in the Kabalas. Secretary, invariably is the badge of fraud. The Kabalas did not show that any extra work was done or extra facility was offered by the appellant justifying such extra payments. The irresistable inference, in these circumstances, is that these extra amounts were collected not on account of extra folding, stamping or packing or on account of DN commission charges, but as additional amounts for the sale of fabrics. Hence, such amounts must be included in the assessable value under Section 4 of the Act. Point answered accordingly." In the case of Orient Fabrics Pvt. Ltd. v. Collector of Central Excise, Ahmedabad - 1997 (20) RLT 173 (Tribunal), it had been held that the amount recovered through debit notes was to be added to the assessable value (Head Note). In the case of Rohit Mills Ltd. v. Collector of Central Excise, Ahmedabad - 1997 (95) E.L.T. 648 (Tribunal) = 1997 (23) RLT 19 (Tribunal), it had been held that the differential price collected under the debit notes was to be added to the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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