TMI Blog1988 (2) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... ved is identical in the above appeals, the same are disposed of by this consolidated order. 3. The facts of appeal Nos. 666/81A and 2324/83A are similar. The facts in appeal No. 666/81A are as below :- The appellants are manufacturing Caustic Soda and within their factory they have a unit for the manufacture of metal containers. They consume captively the metal containers manufactured in their unit in packing caustic soda, solid flakes and Trichloroethylene/perchloroethylene. No sale of metal containers is undertaken by the company. They submitted price lists for metal containers arriving the value on cost accounting basis but without inclusion of any profit and the same was originally approved by the Superintendent, Tirunelveli Circle and subsequently revised by him on adding margin of profit with the assessable value. This procedure was continued till the formation of a division at Tirunelveli. When the Circle was upgraded as Division in charge of an Assistant Collector, he issued a show cause notice on 10.1.1972 to them to show cause as to why the assessable value on metal containers should not be revised from an earlier date i.e. from 1.3.1970 based on the cost of drums arr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation and development investment allowance could not be excluded from the assessable value and the earlier orders passed were in order. Being aggrieved from the aforesaid order, the appellants had filed an appeal to the Appellate Collector of Customs and Central Excise, Madras. The Ld. Appellate Collector had confirmed the findings of the Assistant Collector and being aggrieved from the aforesaid order the appellant has come in appeal before the Tribunal. 4. Shri K. Narasimhan, the Ld. Advocate, has appeared on behalf of the appellant. . He has reiterated the facts. He has argued that the issue involved in appeal Nos. 666/81-A and 2324/83-A is the same and as such his arguments are common for both the appeals. He has referred to rule 6(b)(ii) of the Central Excise Valuation Rules, 1975 and has stated that in terms of the said rules where the excisable goods are not sold by the assessee but are used or consumed by him or on his behalf in the production or manufacture of other articles, the value shall be based if the value cannot be determined on the value of the comparable goods produced or manufactured by the assessee or by any other assessee, on the cost of production or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the price list of drums for 1977-78 (page 72 of the paper book). Shri Narasimhan has argued that in the remarks column it has been mentioned that profit margin at 2.446% and 28.676% has been added with assessable value of the metal containers used in the packing of / caustic soda and trichloroethylene respectively as per the balance sheet for 1977-78. Shri Narasimhan has referred to the Asstt. Collector s order dated 30.6.1980 (page 76 of the paper book) where the Assistant Collector has intimated that if the appellant feels aggrieved from the order as to the finalisation of the price list he should prefer an appeal to the authority concerned. He has referred to the Appellate Collector s order dated 15.1.1981 (pages 86-88 of the paper book). Shri Narasimhan has argued that the Ld. Appellate Collector had observed that the Assistant Collector had acted beyond his jurisdiction and was in violation of the principles of natural justice and the Asstt. Collector was not competent to disobey the orders of the Appellate Collector and had set aside the order and had remanded the matter to the Assistant. Collector with the direction that he should revise the price list in the light of the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisional price list filed by the appellate and the appeal against the said order as well as the revision application filed before the Government of India were unsuccessful and the Government of India in their order in revision dated 22.9.1982 had decided that the said acetylene gas was classifiable under Item 14H and the duty was payable on that basis. Thereafter the appellant had filed a writ petition under Article 32 of the Constitution of India challenging the excisability of the acetylene gas and the said writ petition was admitted on 30.3.1983. The Hon ble Supreme Court had passed the stay order staying the recovery of 1715205.50 for the year 1977-78 to 1979-80 and Rs. 2750664.29 for the years 1980-81 to 1981-82 and also staying further demand on acetylene gas manufactured by the appellants. However, there was no order restraining the appellate authority from deciding the appeal. Shri Narasimhan has argued that the learned Collector (Appeals) had confirmed the assessable value of acetylene and confirmed the orders as to the assessable value of the acetylene captively consumed by the appellants as determined by the lower authority viz. the Assistant Collector in accordance wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of acetylene gas even if made will fetch such a high margin of profit. vii. Even if the Appellate authority considered that the profit could be determined on the basis of the profit of the end product, he is not justified in his view that the principles of the decision of the Appellate Collector of Central Excise in his order-in-appeal No. 1477/77, dated 23.12.1977 cannot be applied to the instant case merely because the said order did not consider Rule 6(b)(ii) of the Valuation Rules. viii. The Appellate authority ought to have appreciated that the said decision was rendered in connection with the determination of the margin of profit in respect of captively consumed articles and consequently the same principle would apply in respect of Acetylene gas which is also captively consumed. ix. The Appellate authority is not justified in not adopting the margin of profit adopted in the case of Sriram Vinyl and Chemical Industries by the Government of India order in Revision No. 535/82, dated 22.9.1982. x. The Appellate authority ought to have given due weight to the fact that Sriram Vinyl and Chemical Industries also produce acetylene gas in the same manner as the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate product which is captively consumed. xx. The Appellate Authority ought to have appreciated that it was for the department to determine the value of the margin of profit on the basis of Rule 6(b)(ii) and it is for the department to justify the margin of profit on the basis that the sale of acetylene gas would yield that profit, and in the instant case the department had not discharged the burden cast upon it. xxi. The Appellate Authority is not justified in merely confirming the order of the Assistant Collector. xxii. The Appellate Authority ought to have in any event remanded the matter for consideration of the margin of profit on the basis of comparable goods of calculation of the profit on the basis of trade in the case of captively consumed articles. Shri Narasimhan has again argued that the acetylene gas manufactured by the appellants cannot be sold as such and as such the same is not excisable. He has pleaded for the acceptance of the appeal. 5. Shri P. K. Ajwani, the learned S.D.R. puts forth the arguments in respect of the three appeals as under :- (1) 666/81 :- Shri Ajwani has argued that in this appeal the period involved is 1st March, 1970 to 4th May, 197 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 975-76. In particular he has referred to annexure 3 of the said letter which appears on page 37 of the paper book where the percentage of profit of metal container has been calculated. He has referred to the Assistant Collector s order dated 7th July, 1980 which appears on page 48 of the paper book and has also referred to internal page 3 of the said order. Shri Ajwani has argued that the Assistant Collector has exceeded his authority in giving findings or depreciation and development rebate. The Ld. S.D.R. has argued that the Assistant Collector has exceeded his jurisdiction. He has argued that the Assistant Collector could not have gone beyond the directions issued by the Ld. Appellate Collector. In support of his arguments he has relied on the judgment of the Hon ble Calcutta High Court in the case of Municipal Commissioner, Howrah v. Calcutta Electric Supply Co. reported in AIR 1970 Cal. 414 where it was held that there was constructive resjudicata suit for declaration that the holding was void and illegal, earlier judgment no longer operates finding thereunder that impugned impositions in regard to the holding had become final and such judgment operates as constructive resjudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 666/81-A On merits, Shri Ajwani has argued that the provisions of Old Section 4 and Valuation Rules are similar to the new Section 4. The interest on borrowed capital has to be added back and in calculating the value, the cost of production and profits have to be added. He has referred to another judgment of the Tribunal in the case of M/s. Apollo Zipper Co. (P) Ltd. v. CCE Calcutta [1987 (29) ELT 126] where the Tribunal had held that Rule 6(b) of the Central Excise (Valuation) Rules, 1975 required that when excisable goods produced by the manufacturer are not sold but are captively used by him and when the value of comparable goods is also not available, the value of the goods captively consumed should be determined on the basis of the cost of production or manufacture and including profits, if any, which the assessee would have normally earned on the sale of such goods . This would mean that if an assessee has normally been making profit but in one particular year incurs loss due to some reasons as is in the instant case, it cannot be inferred therefrom that the assessee would have normally sold his goods without profit or loss. Normally speaking, no businessman or indust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the value of the goods captively consumed by the appellants the same should have been determined on the basis of cost of production or manufacture and including profits , if any, which the assessee would have normally earned on the sale of such goods. Before we come to any conclusion whether the depreciation or development rebate has to be allowed as deduction in computing of the profits, we would first like to make our observations as to Shri Ajwani s arguments that the Appellate Collector s order No. 1477/77, dated 23.12.1977 had become final and it was not open to the Assistant Collector to give a finding as to disallowance of depreciation and development rebate. Undoubtedly, the appellant did not file any appeal against this order and as such the order passed by him becomes a finality in law and the same is binding on the appellant before us as well as respondent. On the other hand, Shri Ajwani had argued that the Assistant Collector had exceeded his authority in giving his finding. If the revenue had any grievance to the findings of the Assistant Collector in his order C. No. V/46/30/48/70, dated 7.7.1980, the revenue could have reviewed the order in terms of the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e - (b) Where such price is not ascertainable, the price, at which an article of like amount and quality is sold or is capable of being sold by the manufacturer or producer, or his agent, at the time of removal of article chargeable with duty from such factory or other premises for delivery at the place of manufacture or production or if such article is not sold or is not capable of being sold at such place, at any other place nearest thereto. New Section 4 Valuation of excisable goods for purposes of charging of duty of excise :- (1) Where under this Act, the duty of Excise is chargeable on any excisable goods with reference to value, such value shall, subject to the other provisions of this section be deemed to be - (b) Where the normal price of such goods is not ascertainable for the reason that such goods are not sold or for any other reason, the nearest ascertainable equivalent thereof determined in such manner as may be prescribed." In the matter before us the appellant manufactures metal containers and captively consume the same. The Ld. Appellate Collector in his Order No. 1477/77, dated 23.12.1977 had given directions that the margin of profit for metal cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch depreciation should be taken into account for the purpose of computing the written down value. In our opinion, there is not justification for this argument. In the first place, objection was raised before the Tribunal or before the High Court that the Department should not have been allowed to raise the question for the first time with regard to the application of paragraph 2 of the Taxation Laws Order. We shall, however, assume in favour of the assessee that the question was implicit in the question actually framed and referred to the High Court. Even upon that assumption we are of opinion that the Tribunal had jurisdiction to permit the question to be raised for the first time in appeal. The powers of the Tribunal in dealing with appeals are expressed in Section 33(4) of the Act in the widest possible terms. Section 33(3) of the Act states that An appeal to the Appellate Tribunal shall be in the prescribed form and shall be verified in the prescribed manner . Section 33(4) reads as follows : (4) The Appellate Tribunal may after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, and shall communicate any such orders to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 33(4) of the Act to entertain the argument of the Department with regard to the application of paragraph 2 of the Taxation Laws Order and remand the case to the Income-tax Officer in the manner it has done. It is necessary to state that Rules 12 and 27 are not exhaustive of the powers of the Appellate Tribunal. The Rules are merely procedural in character and do not, in any way, circumscribe or control the power of the Tribunal under Section 334 of the Act. We are accordingly of the opinion that the Tribunal had jurisdiction to entertain the argument of the Department in this case and to direct the Income Tax Officer to find whether any depreciation was actually allowed under the Industrial Tax Rules and whether such depreciation should be taken into consideration for the purpose of computing the written down value." The Hon ble Bombay High Court in the case of New India Life Assurance Co. Ltd. v. Commissioner of Income Tax, Bombay reported in AIR 1958 Bombay 143 had observed as to the general powers of the Tribunal. Para Nos. 3 and 4 of the said judgment are reproduced below :- 3. Before we look at the authorities and before we look at the section and the relevant rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to appeals and cross-objections contained in 0.41 of the Civil Procedure Code; and as we shall present point out, the position of the Appellate Tribunal is the same as a Court of appeal under the Civil Procedure Code and the powers of the Appellate Tribunal are identical with the powers enjoyed by an appellate Court under the Code. 4. Now, in the first place, we must look at the section which confers jurisdiction upon the Tribunal to hear appeals from the decisions of the A.A.C. Sub-section (4) of Section 33 provides that the Appellate Tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, and shall communicate any such orders to the assessee and to the Commissioner. The expressions thereon has come in for considerable judicial comment and observation, and the authorities lay down that the power of the Tribunal is confined to dealing with the subject matter of appeal is constituted by the grounds of appeal preferred by the appellant. This sub-matter cannot be expanded even by the appellant unless leave is granted to him to do so by the Appellate Tribunal. The subject-matter can certainly not be expanded b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat ends of justice require that the Assistant Collector should re-examine the matter and recompute the margin of profit on the metal containers manufactured by the appellant without linking to the end product on the basis of the margin of profit calculated by the Chartered Accountant acceptable to the revenue authorities in accordance with the accountancy principles. Accordingly, we set aside the impugned orders in appeal Nos. 666 and 2324 and remand the matter to the Assistant Collector. While re-adjudicating the Assistant Collector shall not be bound- by anything done or anything ordered by him or by the Appellate Collector/Collector (Appeals) in the past in these proceedings. Since the matter is very old, we shall appreciate, if the Assistant Collector readjudicates the matter within six months. Since we are remanding the matter, we feel that it is not necessary for us to give our findings on the other issues. Appeal No. 1993/83A The brief facts of the case are that the Appellants are manufacturing acetylene gas falling under Tariff Heading 14-H(vi) from 18.6.1977 and consuming captively the same in the manufacture of trichloroethy-lene/perchloroethylene in the factory itse ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
