TMI Blog2009 (11) TMI 303X X X X Extracts X X X X X X X X Extracts X X X X ..... B.S.V. Murthy, Member (T)]. - The appellants are engaged in manufacture of motor vehicles and parts thereof. Duty demand of Rs.25,21,943 has been confirmed on the ground that the appellants had collected Road Delivery Charges (RDC) in respect of vehicles cleared by them over and above the actual amount spent by them. We heard both sides, who argued at length and also have gone through the records. Both sides indicated that they would like to make written submissions and accordingly they were permitted to file the same within 15 days. Both sides made written submissions which have also been taken into consideration. 2. Road delivery charges are collected in terms of agreement entered into with the dealers. According to the agreement, the appellant arranges for transportation/transit insurance on behalf of the dealer and undertakes to deliver the goods at the premises of the dealer. The agreement also clearly provides that the delivery shall be made "ex-factory". The transportation/delivery charges referred to as "Road Delivery Charges" (RDC) are recovered from the dealer by showing the same in sales invoices separately. On verification, it was found that in some cases, the diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal product. In fact, this was the position under Old Section 4 of Central Excise Act, 1944. Once normal price at the factory gate was available, that was to be accepted and duty charged on the same. But, if this contention is accepted, assessees can simply clear the goods at the factory gate and collect charges under different heads separately. In such a case, assessable value would not be the transaction value but price charged at the factory gate. This would be doing total violence to the concept of transaction value under New Section 4 of Central Excise Act, 1944. Therefore, this cannot be the correct interpretation of the law. The appellants relied upon the decision of Hon'ble Supreme Court in the case of M/s Accurate Meters Ltd . - 2009 (91) RLT 653 (S.C.) wherein the decision in case of M/s Baroda Electric Meters was followed. We are afraid the decision of the Supreme Court in case of M/s. Accurate Meters Ltd. as well as M/s Baroda Electric Meters - 1996 (85) ELT. 363 would not help the appellant. In both these cases, while placing order, contractor's price pre-determined with break-up of different elements and accepted by Electricity Boards, have been shown. The con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in another case and then paid the differential duty as above. The department was of the view that, since each transaction has its separate entity and has to be dealt with separately, excess recovery could not be adjusted against short recovery in another transaction. In all the cases, the assessees worked out differential Central Excise duty and paid the same. Show cause notices were issued proposing recovery of Central Excise duty for incorrect adjustment and computation of differential Central Excise duty on excess/short road delivery charges to customers for the period in dispute (details are contained in the Annexure to this order): The demands were confirmed by the adjudicating authority, who, in some cases, also imposed penalty. Appeal E/95/07 has been filed by the Revenue against dismissal of the department's appeal seeking imposition of penalties, by the Commissioner (Appeals). 5. On hearing both sides, we find that the issue in dispute stand settled in favour of the appellants by the Apex Court's decision in the case of Escorts JCB Ltd. v. CCE , Delhi - 2002(146) E.L.T. 31 (S.C.) holding that the element of freight and transit insurance is not includible in the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the excess RDC is includible or not. 5.3 Judicial discipline requires that one Bench of the Tribunal does not sit in judgment over the judgment/decision of another Bench. When this was pointed out to the learned counsel, he cited the decision of Hon'ble Supreme Court in the case of Collr. of CE, Calcutta v. A Tobacco Products as reported in 2004 (170) E.L.T. 135 (S.C.). "11. Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed, asstatutes. To interpret words, phrases and provisions of a statute, it may be come necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes. In Londo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat this aspect can be considered by the Tribunal and earlier decision need not be followed. 5.5 In the absence of the detailed discussion of the issue involved in the case and about applicability or otherwise of M/s. Escorts JCB case, it can not be said that the Tribunal laid down any law nor it can be said that the ratio of that decision is applicable to the present case. At this juncture, we have to observe that in the normal course, when a case is cited and submission is made that the issue is covered, it may so happen (not that it always happens) that Bench accepts the contention and passes the order unless the representative/advocate on the other side points out that the decision does not cover the issue. We have to admit that when the hearing started, our impression was that the issue has been settled in favour of the appellant by the precedent decision of the Tribunal and only when the learned special counsel vehemently submitted that he would be able to convince us that the decision of the Tribunal would not be applicable, we proceeded to hear both the sides and spent considerable time hearing the arguments. While deciding not to follow the decision of the Tribunal, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n some cases, it would be short. Total differential duty payable on the excess collection of freight made by the appellant in respect of the orders which were challenged before the Tribunal which culminated into an order dated 29-5-08, was around Rs.2.13 crores. It would mean that appellants would have collected more than Rs.10 crores on freight alone. The quantum of excess freight and the duty liability thereon supports the contention of learned special counsel that RDC, in fact, was another source of tax free income for the appellant. If the intention was not to make a profit out of transportation, assessee would have adjusted RDC from time to time and ensured that amount collected was more or less equal and would have informed she Department that they would be claiming deduction of freight on equalized basis or would have paid duty on transportation charges wherever collection was extra. We can not also say that excess collection was a profit arising from delivery of vehicles alone. It is not the business of the assessee. Assessee's business admittedly is manufacture of motor vehicles and parts and delivery is part of that business. Therefore, on this ground also, this profit is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice as well. The Department cannot be travel beyond the show cause notice Even in the grounds of appeals these points have not been taken, .. (underlining supplied) 12.7 In Reckitt Columam of India Ltd. v. Collr. of Central Excise - 1996 (88) E.L.T. 641 (S.C.) the Hon'ble Apex Court held as under: It was beyond the competence of the Tribunal to make out in favour of the Revenue a case which the Revenue had never canvassed and which the appellants had never been required to m It is upon this ground alone that the appeal must succeed. . (underlining supplied) 6.2 First of all, we would like to examine the decisions relied upon by the learned Advocate for the appellant. In Balarpur Industries Ltd. case as reported in 2007(215) E.L.T. 489 (S.C.), the issue was valuation of the goods cleared to a sister wilt as a stock transfer for the purpose of levy of 8% excise duty as per Rule 57CC of Central Excise Rules, 1944. The Department had proposed assessment under Rule 6 of Valuation Rules and the lower authorities had already held that Rule 6(b)(ii) of Valuation Rules would apply. At this stage, the Hon'ble Supreme Court observed that it would not be open to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied, result would be a decision on the dispute relating to the addition of excess amount collected wider the head of RDC only. Therefore, as rightly contended by the leaned special counsel, the defence of the appellant does not get affected in any manner and in any case, the Commissioner (Appeals) has applied the correct Rule. We also find that there are several decisions of the Supreme Court holding that merely because of wrong Rule or wrong Section is quoted, the proceedings do not get vitiated. In case of Fortune Impex - 2004 (167) E.L.T. A134 (S.C.), the Hon'ble Court had consider the case where the provision of Section 18(1) of Foreign Exchange Regulation Act, 1973 was mentioned, but relevant provisions of Customs Act applicable had not been mentioned. The Hon'ble Court held that since the provisions of FERA, 1973 have been mentioned and all allegations and charges against the appellant were mentioned in clear terms in the show cause notice, the proceedings do not get vitiated. In this case also, it is not the argument of the appellant that facts have not been clearly mentioned and real ground has not been brought out. Mumbai Bench of the Tribunal had also considered a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, the requirement of satisfaction of the conditions prescribed in the main Section is to be made. Another major change that has come about is that earlier if it was found that normal price under Section 4(1)(a) could not be determined, what was required to be determined under Section 4(1)(b) was nearest equivalent of the normal price. Whereas, in the new Section, the value has to be determined in such a manner as may be prescribed. For better appreciation, the relevant provisions of the old Section 4 and new Section 4 are reproduced below: "Old Section 4: 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 their value, such value, shall, subject to the other provisions of this Section, be deemed to be (a) 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 for delivery at the time and place of removal, where the buyer is not related person and the price is the sole consideration for the sale Provided that- (i) where, in accordance with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e actually paid to him for the goods sold and the money value of the additional consideration, if any, flowing directly or indirectly from the buyer to the assessee in connection with the sale of goods, and such price-cum-duty, excluding sales tax and other taxes, if any, actually paid, shall be deemed to include the duty payable on such goods. 7.2 In this case, the goods are sold at the factory gate which is not in dispute. Assessee and the buyer are not related. The only question is whether the price is the sole consideration for the sale which is another requirement to be fulfilled to accept the price charged as a transaction value. This is to be read with the definition of transaction value given in the Section 4 which is reproduced below: "(d) "transaction value" means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case also, what is required to be done is to take the total price charged to the dealer and thereafter calculate total of all admissible deductions- Once that is done, the payment under head of transportation will have to be the amount which is actually incurred or payable as per the explanation and the definition of transaction value. Thus, when we examine provisions of new Section 4, it becomes very clear that what can be deducted is only the actual transaction value. Once actual transaction value is not available, in view of the fact that the amount reflected in the invoice towards RDC is not the actual one, necessarily, the assessing officer has to determine the value under Valuation Rules. 7.6 Again there is a major difference between old Section 4 and new Section 4 as regards determination of value under the Valuation Rules. In the old Valuation Rules, the officer was to arrive at nearest equivalent of the normal price of such goods. In the new Section 4, there is no such requirement. Once it is held that transaction value under Section 4 cannot be determined, on the basis of value declared in the invoice, and in terms of explanation and transaction value, there are ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appropriate before the provisions relating to the unjust enrichment were incorporated in Central Excise law. Now, the situation is where there is excess collection of RDC, there is a liability of excise duty to be paid. Where there is short collection of RDC, naturally the duty would have been paid in excess. Therefore in respect of each and every transaction, where there is a short collection of RDC, going strictly by the definition of transaction value as discussed above, the result will be excess payment of excise duty. This amount of excise duty paid in excess cannot be refunded to the appellant unless the appellant is able to show that he has not collected the amount being claimed as refund. If duty amount has been collected by the appellant, the refund can be claimed only by the buyer. On the other hand, when it comes to recovery under any of the provisions of Central Excise law, the recovery is always from the assessee irrespective of the fact whether he has collected the excise duty or not even though excise duty being a indirect tax by its very nature, is to be collected from the customer and paid to the Government. Therefore, the legal provisions relating to the recovery ..... X X X X Extracts X X X X X X X X Extracts X X X X
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