TMI Blog1997 (1) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... granted to sister plants of SAIL, siding and haulage charges inside the factory premises and contribution towards Joint Plant Committee (JPC cess). This order is being challenged. 2. Shri M. Ali, JDR raised an objection to the effect that appellant has not obtained clearance from the Committee of Secretaries as required by the Supreme Court. He pointed out that copy of the minutes of the meeting of the Committee produced by appellant does not relate to the present appeal. Item No. 47 in the minutes relates to an appeal filed by SAIL against - Order-in-Appeal No. 88/JSR/83, dated 30-12-1983 regarding inclusion of (i) JPC charges, (ii) special discount allowed to sister units and (iii) Railway siding and Haulage charges in the assessable value for levy of excise duty . The file number is stated to be FIN/1/94-I (Vol VI). It is pointed out that this appeal has been filed against Order-in-Appeal No. 99/JSR/93, dated 30-12-1993. We are satisfied that 88 and 83 referred to in the minutes are mistake for 99 and 93 respectively for several reasons. The three points in dispute referred to in the minutes are the points raised by SAIL in this appeal. According to appellant, SAIL has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue does not include trade discount allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods. Dispute in this appeal relates to bulk of the goods not sold but transferred to sister plants of the manufacturing company. These goods are used or consumed by the manufacturer in the manufacture of other goods as contemplated by Rule 6(b) of the Valuation Rules. According to sub-clause (i) of Rule 6(b), the value shall be based on the value of the comparable goods manufactured by the assessee or by any other assessee. Appellants sells the goods to independent buyer in quantities which can be regarded as small compared to the large quantities which are captively consumed. No special discount is granted to the independent buyers and hence the lower authorities disallowed deduction of any discount in arriving at the assessable value of captively consumed goods. Appellant contends that the lower authorities erred in ignoring the proviso to Rule 6(b)(i) of the Valuation Rules. 5. The proviso to Rule 6(b)(i) of the Valuation Rules reads thus :- Provided that in determining the value under this sub-clause, the proper officer sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the cost of transportation from the place of removal to the place of delivery shall be excluded from such price. Section 4(4)(b) reads thus :- Place of removal means - (i) a factory or any other place or premises of production or manufacture of the excisable goods; or (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty, from where such goods are removed". Factory in Section 2(e) of the Act reads thus :- `factory means any premises, including the precincts thereof, wherein or in any part of which excisable goods other than salt are manufactured, or wherein or in any part of which any manufacturing process connected with the production of these goods is being carried on or is ordinarily carried on. (Emphasis supplied) It is argued that charge of Rs. 30 per ton is collected to meet the cost of transportation inside the factory from the place of production to the railway siding, that Section 4(2) allows deduction of cost of transportation from place of removal to the place of delivery and since place of production or the store room inside the factory is place of removal , the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rehouse or place wherein the goods have been permitted to be deposited without payment of duty and to relate these aspects to scheme of Section 4(2) of the Act allowing exclusion of cost of transportation from the place of removal to the place of delivery where the price for delivery at the place of removal is not known and value thereof is determined with reference to price for delivery at a place other than the place of removal and to contend that place of removal is very well inside the factory premises and the cost of transportation from such place to the factory gate or exit from the factory premises is to be excluded. On this basis it is contended that siding charges and haulage which are nothing but transport charges inside the factory premises before the goods reach the exit point are to be excluded under Section 4(2) of the Act. 9. Learned Counsel also referred to the provisions of Section 4 of the Act as it was originally and after the amendments of 1955 and 1975 and the observations of the Supreme Court in Collector of Central Excise v. Voltas Ltd. - 1977 (1) E.L.T. (J 177), Bombay Tyre International case 1983 (12) E.L.T. 869 to the effect that price has to be fixed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gate as referred to by the Supreme Court in Voltas Ltd. - 1977 (1) E.L.T. (J 177) and Bombay Tyre International - 1983 (12) E.L.T. 869 and other cases and delivery is at a different place such as depots or other permitted places. If there is no delivery at the factory, place of production or warehouse or place or deposit in the factory premises or factory gate it is a case of price for delivery at the place of removal not being known. In such a case delivery must be at same place other than the factory or place of production or warehouse or place of deposit in the factory premises, that is same place different from such places, say, for example, depot, then it is a case of price at such different place being known. In such a case the price for delivery at the different place shall be basis for determination of value and Section 4(2) of the Act requires that cost of transportation from the factory to the Depot shall be deducted from the price. There is no dichotomy between the price for delivery at the storeroom or approved place of deposit or warehouse and for delivery at the factory gate. All these are cases of delivery at the factory or factory gate. One cannot conceive of a cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termined under sub-clause (8) to enable it to discharge its functions and to implement specific schemes entrusted to it by the Central Government . On 16-1-1992, the notification was further amended, empowering the JPC to require the member steel plants to add the three elements listed therein to their ex-works prices of all or any of the categories of iron and steel and to remit the same to the JPC within a specified period. The first element is an element of price towards the Steel Development Fund (SDF charges) for financing schemes, projects and other capital expenditures for modernisation, research and development, rehabilitation, diversification, renewals and replacements, balancing, additions to capacity, major new investments, any other programme for improving the quantum or technology or efficiency of production of iron and steel or their quality. The second element is element of price for enabling the Committee to discharge its functions and to implement schemes entrusted to it by the Central Government (JPC charges). The third element is an element of price towards the Engineering Goods Export Assistant Fund (EGEAF charges). The JPC at its meeting held on 16-1-1992 req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax payable on the transaction of sale from the purchaser. In Food Corporation of India v. State of Kerala - 1988 (68) STC 1 (SC), there was an agreement between the State Government and FCI for the distribution of articles covered by the Kerala Rationing Order, 1966 which required FCI to collect administrative surcharge and price equalisation charge from the retailers due to the Government. The question was whether these charges collected by FCI and made over to the Government should be included in the turnover of FCI for the purpose of assessing Sales Tax. It was held that these charges were the liabilities of the retailers to the Government and FCI functioned merely as the collection agent on behalf of the Government and were not part of the price which was specifically determined under a separate provision of the agreement and hence cannot be included in the turnover for assessing Sales Tax. It has to be noted that these charges were not in the nature of taxes as commonly understood. The liability of FCI to collect and remit had no statutory foundation and arose under an agreement with the Government. 13. In National Co-operative Consumers Federation of India Ltd. v. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses which built up manufacturing apparatus are not to be deducted to arrive at the assessable value. In Collector of Central Excise, Meerut v. ECE Industries Ltd. - 1994 (74) E.L.T. 731 (Tribunal), the party accepted that expenses incurred for staff colony expenditure was to be included in the assessable value and on that basis, Department s plea was upheld. We fail to see the relevance of these decisions in deciding the controversy raised before us. 16. The dispute arises in the context of value to be determined under Section 4(1)(a) of the Act. Value shall be deemed to be 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 a related person and the price is the sole consideration for the sale. Sale is by the manufacturer to the buyer. Price is the consideration agreed between them for the sale of goods which are the subject matter of the sale. Price is paid by the buyer to the manufacturer who appropriates it for himself. Where the manufacturer is compelled by law to collect some charges over and above the price without right to appropriate it for h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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