TMI Blog1994 (4) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... or which it enters into contracts with such customers. Its customers are mainly Government Departments, like Railway, Public Undertakings and other industrial consumers to whom the goods are sold on the basis of contract price. Price lists in part II are submitted for contract sales whereas for sale in open market, it submits price list in part I. The learned Senior Advocate further pleaded that inputs and raw materials are purchased which are duty paid and the Modvat credit taken by the appellant is reduced from the price in the invoice and the price which is charged from the customers is the invoice price. He referrred to the provisions of Section 4 of the Central Excises and Salt Act, 1944. He pleaded that most of the sales are to BHEL and Railways and price lists in part II are submitted and invoice price is the price. He pleaded that earlier the matter had come up before the Tribunal and the Tribunal had remanded the matter and on remand a fresh adjudication order was passed. The appellant being not satisfied filed an appeal before the Collector and being not satisfied with the order passed by the Collector, the appellant is before the Tribunal. Dr. Pal, the learned Senior Adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties are not related persons. He pleaded that Rule 57 relates to Modvat. The appellant is paying the excise duty in accordance with law and is not claiming any deduction on account of the same. He also referred to the appellant s own case reported in 1990 (45) E.L.T. 342, Collector of Central Excise v. Incab Industries. He further pleaded that price list was in part II. He referred to page 34 of the paper book No. II. It is the rate contract No. 7163078 with BHEL. He further argued that besides other sales, sales are to BHEL and Crompton Greaves Ltd. He referred to page 95 of the paper book No. II which is annexure to the quotation No. 09/bc/37 and on page 95 there is mention : You shall pass on a relief of Rs. 3.30 per kg. in all your invoices against this order. Dr. Pal, the learned Senior Advocate referred to the price list which appears on page 100 of the paper book and argud that there is mention of the Modvat relief in column No. 11 of the price list. The learned Senior Advocate referred to the following judgments : (1) 1989 (43) E.L.T. 165 (SC) - Hindustan Polymers v. Collector of C. Excise. (2) 1991 (52) E.L.T. 59 (Tribunal) - Collector of Central Excise v. VST I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opper rate plus CST as prevailing on the last date of the month prior to the scheduled delivery month. She referred to the price list which appears on page 41 of the paper book No. II effective from 21st August, 1987 and also the invoice in favour of M/s. BHEL which appears on page 43 of the paper book No.II. She relied on the following decisions :- (1) 1988 (38) E.L.T. 535 (SC) - Ujagar Prints, etc. v. Union of India and Others (2) 1989 (39) E.L.T. 493 (SC) - Ujagar Printer etc. v. Union of India and Others (3) 1985 (20) E.L.T. 179 (SC) - Empire Industries Ltd. and Others v. Union of India and Others. She argued that the selling price is the assessable value. In support of her argument, she cited the following decisions : - (1) 1987 (29) E.L.T. 644 (Tribunal) - Shree Srinivasan Foundry Others v. Collector of Central Excise (2) 1986 (26) E.L.T. 321 (Tribunal) - Collector of Central Ezcise, Calcutta v. M/s. Khaitan Fans (P) Ltd. She also argued that the Collector (Appeals) has not discussed the earlier ouder passed by the Collector (Appeals). She argued that the appellant cannot reduce the selling price. She pleaded for the rejection of the appeal. 3. In reply, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e value is to be determined in accordence with Sec. 4 of the Act and Section 4 only and Modvat credit has no direct impact on the assessable value. 17. As stated in the earlier paragraphs the benefit under Modvat is given to avail the credit of duty paid on the inputs while paying duty on the final product. It has and it cannot have any effect on the assessable value which is to be determined in accordance with Sec. 4 of the Act. Further, the assessable value is to be determined in accordance with the provisions of the Act, and the Modvat credit is provided by the rules and the rules cannot have any overriding effect on the provisions of the Act. 18. It may be that in a given case the manufacturer may revise the contract price at which the goods are sold as a result of reduction in the cost of final product on account of obtaining Modvat credit. However, in the event of a revision in the contract price, the manufacturer has to follow the procedure under the Central Excise Rules, before the price revised/modified is accepted as the assessable value. In this context it is relevant to refer to Rule 173C of the Central Excise Rules which reads as follows :- Rule 173C. Assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esult of revision of contract price requires the prior approval of the proper officer under Rule 173C(2)(vi) and in the absence of which it cannot be the assessable value. 19. From the foregoing discussion it follows that the assessable value cannot be reduced automatically as a result of obtaining Modvat credit by the manufacturer. 20.The respondents contended that the reduction in the assessable value mentioned in the price-list is based on a letter of Railways under which the price of the product is revised. We are unable to accept this contention, as neither before us nor before the lower authorities, the original contracts entered into between the respondents and the Railways is placed. We do not know what are the terms of the contract. We do not know whether the terms of the contract can be altered specifically with reference to rate during the operation of the contract. If so, in what manner can the terms be altered. Should it be by entering into a fresh contract or by merely issuing a letter. We do not also know whether the price once entered can be altered with retrospective effect. In the absence of these particulars which can be decided after examining the contract, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 22, 23, 24, 25 and 36 had held as under :- There is an interesting judgment of the Tribunal in Collector of Central Excise, Hyderabad v VST Industries, Hyderabad and 2 Others [ 1990 (16) ETR 539 = 1991 (32) ECR 346 (CEGAT SB-A]. The following line of thinking lends support to the view taken by me. After extracting a passage from the Bombay Tyre case [1983 ECR 1627D (SC)] and Hindustan Polymers [1989 (43) E.L.T. 165 = 1990 (26) ECR 153 (SC)], the Tribunal says :- The language of Section 4 and the extract of the Supreme Court s judgment reproduced above show that the interpretation as given by the Supreme Court alone is the correct one. Rule 5 of Valuation Rules and Section 4 of the Act have to be read together. A harmonious construction can lead only to one conclusion that extra accrual should be added to the wholesale price and the assessable value worked back after allowing admissible deductions. Addition of such extra accruals to the assessable value would distort the meaning of the section because there is no way in which abatement of excise duty which is permitted by Section 4 can be given if the extra accrual is directly added to the assessable value. In view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the amount recovered by way of freight administrative charges in their price lists which was only subsequently found by the Department. In this context, the decision of the Supreme Court in the case of Jaishri Engineering Co. (P) Ltd. v. Collector of Central Excise, reported in 1989 (40) E.L.T. 214 (SC) may also be borne in mind wherein the Supreme Court held that even the plea that the Departmental Officers visited the assessees factory and should have been aware of the processes and production of the goods will be of no avail to the assessee and will not be a reason for the assessee not to truly and properly describe the goods. It is further seen that even where an assessee indicated certain elements of costs in their sale invoice but had not shown them in their price list, assuming those to be deductible, the Tribunal in the case of M/s. Kerala State Detergents Chemicals Ltd. v. Collector of Central Excise, Cochin, reported in 1987 (11) ECR 58 (CEGAT SB-A) held that it is for the appropriate officer to determine the assessable value on materials placed before him by the assessee and that assessee cannot deduct whatever he presumed deductible and expect the officer to accept ..... X X X X Extracts X X X X X X X X Extracts X X X X
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