TMI Blog2014 (5) TMI 384X X X X Extracts X X X X X X X X Extracts X X X X ..... to the notice of the High Court. The assessee simply challenged the show-cause notices on the ground that the amended Section 4 is not applicable. The High Court without looking into the relevant fact, only on the ground that sub-clause (iii) to Section 4(b) was subsequently added by amendment including `depot', `premises of consignment agent' or `any other place' or `premises' from where the excisable goods were to be sold after their clearance from the factory, declared the notices illegal and set aside the same. Even the matter was not remanded back to competent authority allowing the assessee to bring to its notice "normal price", in course of wholesale trade, place of removal of tractors, transportation charges, etc. There is no option but to set aside the impugned judgment dated 13th September, 2002 passed by the High Court - The case is remitted to the competent authority granting liberty to the assessee to forward a copy of each of the show-cause replies already filed within four weeks. Assessee is also given liberty to produce relevant evidence in support of its claim - Decided in favour of Revenue. - Civil Appeal No. 6620 of 2003 - - - Dated:- 9-5-2014 - Sudhansu J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 6(a) of Central Excise (Valuation) Rules, 1975; (iv) that the assessee had not included in the assessable value (1) after sales services charges (2) dealer's margin (3) marketing and selling expenses and (4) excess freight; (v) that the assessee had concealed the invoice value. 4. The notice alleged that there was an under assessment due to incorrect application of Section 4 of the said Act for the above referred reasons, and therefore, called upon the respondent to show cause to the Assistant Collector of Central Excise Goregaon (East) Bombay under Section 11A of the said Act. 5. The assessee filed a detailed reply to the notice on 30th September, 1985, much beyond the period of filing reply. It was pointed out that the assessee had been regularly filing its monthly returns and maintaining the production registers. It had been filing classification list and price list which were checked thoroughly by the assessing authority right from the production stage. The depots are neither different bodies nor have they any separate existence. They are part and parcel of the assessee itself. With respect to Rule 6(a), it was submitted that the said Rule applies only in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1986. The assessee by its earlier letter dated 24th February, 1986, also 4 asked for the work sheets showing as to how the assessable value had been worked out. 7. Thereafter, the assessee was served with annexure to the first show- cause notice on 21st May, 1986. The annexure stated that the list showing the difference in the prices at Daman and Ludhiana when compared to those at Bombay which was on much higher side upto Rs.5,000/- per tractor and it contained the amount beyond the reasonable expenditure on account of transportation, insurance etc. In the said annexure, it was accepted that few tractors i.e. about 20% were sold at the factory gate at Kandivali to show that the prices are ascertainable at the factory gate under Section 4(1)(a) of the said Act. It was further alleged that this was done with an ulterior motive to reduce the duty liability. It was claimed that there was a short payment to the tune of Rs.3,59,45,487.40 (Rupees Three Crores Fifty Nine Lakhs Forty Five Thousand Four Hundred Eighty Seven and Forty Paise only) and thereby asked as to why a penal action under the Act should not be initiated apart from the recovery under Section 11A of the Act. Detaile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce 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: Provided that:-- (i) where, in accordance with the normal practice of the wholesale trade in such goods, such goods are sold by the assessee at different prices to different classes of buyers (not being related persons) each such price shall, subject to the existence of the other circumstances specified in clause (a), be deemed to be the normal price of such goods in relation to each such class of buyers; (ii) where such goods are sold by the assessee in the course of wholesale trade for delivery at the time and place of removal at a price fixed under any law for the time being in force or at a price, being the maximum, fixed under any such law, then, notwithstanding anything contained in clause (iii) of this proviso, the price or the maximum price, as the case may be, so fixed, shall, in relation to the goods so sold, be deemed to be the normal price thereof; (iii) where the assessee so arranges that the goods are generally not s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the buyer to the assessee. Explanation.--In this sub-clause packing means the wrapper, container, bobbin, pirn, spool, reel or warp beam or any other thing in which or on which the excisable goods are wrapped, contained or wound; (ii) does not include the amount of the duty of excise, sales tax and other taxes, if any, payable on such goods and, subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale; Explanation: For the purposes of this sub clause, the amount of the duty of excise payable on any excisable goods shall be the sum total of:- (a) the effective duty of excise payable on such goods under this Act, and (b) the aggregate of the 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:- (i) in a case where a notification or order providing for any exemption (no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the tractors were sold by the assessee from their depots whether on wholesale basis or retail under the law as it stood at that point of time. The said question was answered in negative in favour of the assessee and the High Court set aside the show-cause notices. In the present case as the matter relates to the years 1982 to 1985 Section 4, as it then stood and quoted above shall apply. 15. The scope of Section 4 has been explained by this Court in Union of India and Ors. v. Bombay Tyre International Ltd. and Ors, (1984) 1 SCC 467. The ramifications thereof has also been discussed in Asstt. Collector of Central Excise v. Madras Rubber Factory Ltd., 1986 Supp. SCC 751. 16. In Bombay Tyres International Ltd. (supra) this Court had an elaborate discussion on Section 4 and the changes brought in by 1973 Amendment Act. In the said case this Court observed and held as follows: 26. Accordingly, we hold that pursuant to the old Section 4(a) the value of an excisable article for the purpose of the excise levy should be taken to be the price at which the excisable article is sold by the assessee to a buyer at arm's length in the course of wholesale trade at the time and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 . 31. Where the normal price of such goods are not ascertainable for the reason that such goods are not sold or for any other reason, the new Section 4(1)(b) provides that the nearest ascertainable equivalent thereof determined in such manner as may be prescribed shall be the value of the excisable goods for the purpose of charging the excise duty. 32. It will be noticed that the basic scheme for determination of the price in the new Section 4 is characterised by the same dichotomy as that observable in the old Section 4. It was not the intention of Parliament, when enacting the new Section 4 to create a scheme materially different from that embodied in the superseded Section 4. The object and purpose remained the same, and so did the central principle at the heart of the scheme. The new scheme was merely more comprehensive and the language employed more precise and definite. As in the old Section 4, the terms in which the value was defined remained the price charged by the assessee in the course of wholesale trade for delivery at the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which should be put also on the old Section 4. We have earlier indicated our inability to accept the proposition that the old Section 4 defined the value of an excisable article in terms of the manufacturing cost and manufacturing profit exclusively. We find from an examination of the provisions of the new Section 4 that a similar conclusion must follow. The normal price mentioned in the new Section 4(1)(a) is the price at which the goods are ordinarily sold by the assessee in the course of wholesale trade. It is the wholesale price charged by him. It is a price which may vary, according to the first proviso to the new Section 4(1)(a) with different classes of buyers. It may also be, according to the second proviso to the new Section 4(1)(a), the price fixed as the wholesale price under any law or the maximum price where the law fixes a maximum. The price may also be a different price if the case falls within the third proviso to the new Section 4(1)(a). In that event it will be the price charged by a related person in the course of wholesale trade. Clearly, it is not possible to conceive of the price under the new Section 4(1)(a) being confined to the manufacturing cost and the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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