TMI Blog2003 (9) TMI 786X X X X Extracts X X X X X X X X Extracts X X X X ..... mber, 1975, the appellants filed price lists in terms of the proposed new Section 4 of the Central Excise Act introduced in October, 1975, indicating that the sales are being made at the factory gate to dealers and also that the vehicles are transferred from the factory to RSOs for sales therefrom, and requested the Asstt. Commissioner to approve payment of duty based on NDP as is applicable to concerned RSO after deducting the cost of transportation. Vide letter dated 30-9-1975, the appellants claimed that duty on clearances to RSOs should also be levied at the prices applicable on wholesale rate, since sales were effected in the course of wholesale trade to dealers at the factory namely, dealers in the State of Bihar. The price lists for clearances to dealers in Bihar were approved by the Asstt. Commissioner s letter dated 1-10-1975. The Asstt. Commissioner also approved separate set of price list filed for clearances to RSOs directing payment of excise duty on NDP charged by RSOs for sales made from RSOs. Thus the price for dealers in Bihar was not made applicable for removals to RSOs for eventual sale therefrom. The appellants agitated the issue of assessment of RSOs clearances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing recovery of ₹ 1,07,80,57,188/- as basic duty and ₹ 66,99,837/- towards automobile cess on the ground that the price at which the MVCs are sold from RSOs should be based on the value for removals to RSOs (no demand was raised in respect of factory gate sales) and proposing recovery of ₹ 45,66,60,000/- towards excise duty and ₹ 29,51,000/- towards automobile cess by inclusion of charges for pre-delivery inspection and expenses incurred by the dealer and after-sales service charges and warranty carried out by the dealers to the customer in the assessable value of the MVCs. The notice also proposed penal action on the appellants-company under Rule 173Q etc. and on 4 employees of the company under Rule 198 of the Central Excise Rules. The notice was contested. The Commissioner who adjudicated the notice confirmed the demands raised thereunder, imposed penalty equal to duty on the company and confirmed the demand and interest and he also imposed penalties of the following amounts on the following persons :- (1) Shri A.P. Arya, Sr. Vice President (2) Shri S. Muzumdar, former DGM (Finance) (3) Shri P.K. Sinha, Sr. Manager (Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne class of buyers cannot, therefore, be directed to be adopted as the price in respect of all the classes of buyers. Since the position under the old Section 4 and new Section 4 is held to be the same, this holding holds good for both periods. In the present case, dealers buying goods at the factory gate and those buying from the depots are buying goods from the appellants on the same terms and conditions and under the identically worded dealership agreement. In such a situation, the MRF decision is not applicable. We note that in the case of Transpek Industry Ltd. [2002 (146) E.L.T. 423], the Tribunal after considering the MRF judgment, rejected the contention of the Department that buyers who bought goods from consignment agents of the assessee are a separate class of buyers from those who bought goods at the factory gate of the assessee. The relevant portion of the above decision reads as under :- ...... We have heard both sides. We find that the Commissioner has discussed 3 fold sale patterns viz. (i) contract sale, (2) ex-factory sale to individual buyers, and (3) clearances to consignment agents and held that sales were through consignment agents and therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to independent buyers and they were also clearing goods to their depots and selling there from at different prices. On the basis of evidence placed on record, they claimed that the dealers at different places were different classes of buyers. The Tribunal observed that the question whether a wholesale buyer or dealer is a separate class of buyer or not, is a question of fact which has to be decided on appreciation of the entire evidence. In our view, this decision does not lay down the principle of law that in all cases, dealers buying from the depots should be treated as class of buyers different from those buying at the factory gate. In the present case, there is no factual basis to treat dealers in different States as separate class of buyers - the terms and conditions of sale are identical for dealers located in various States, there is no uniform maximum retail price inclusive of local tax for the appellants goods throughout the country; the basic price to the dealers and dealers basic price to customers are always prior to levy of local tax and local sales tax and other local levies are charged extra and are to the buyers account and are shown separately in the invoice rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat such goods are to be assessed on the basis of the price at which they were eventually sold from the RSO. 9. The finding of the Commissioner is also contrary to the CBEC s circular dated 25-1-1990 which clarifies that dealers situated in different places cannot be treated as different classes of buyers. The circular was relied upon by the Commissioner who did not follow the same, by observing that the situation is changed after the verdict of the Apex Court in the case of MRF. However, the appellants are correct in contending that the above circular is binding upon the Revenue in the light of the Apex Court decision in Dhiren Chemicals [2002 (143) E.L.T. 19] wherein the Court held that although, the expression on which duty of excise has already been paid which was the issue in dispute was interpreted by the Court in favour of the Revenue, if there are circulars which have been issued by CBEC placing different interpretation thereupon, that interpretation will be binding upon the Revenue, and in the light of the Tribunal s order in the case of Bharat Aluminium Co. Ltd. (supra) which dismissed the Revenue s contention on the same basis. 10. It is also relevant to note tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. Himatsingka Auto Enterprises Banderdewa GG057234 11-11-82 AD/V/C 05194 31-8-82 1,43,163 9. Himatsingka Auto Enterprises Banderdewa GG057233 11-11-82 AD/V/C 05193 31-8-82 1,50,426 10. Himatsingka Auto Enterprises Banderdewa GG057232 11-11-82 AD/V/C 05142 31-8-82 3,00,953 11. Himatsingka Auto Enterprises Banderdewa GG057231 11-11-82 AD/V/C 05064 19-8-82 1,43,963 12. Himatsingka Auto Enterprises Banderdewa GG057228 11-11-82 AD/V/C 06043 16-9-82 7,52,281 13. Himatsingka Auto Enterprises Banderdewa GG057230 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GG061838 19-8-83 AD/V/C 09105 16-12-82 1,50,477 25. Himatsingka Auto Enterprises Banderdewa GG059801 7-6-83 AD/V/C 09287 31-12-82 1,43,963 26. Himatsingka Auto Enterprises Banderdewa GG059802 7-6-83 AD/V/C 09288 31-12-82 3,00,932 27. Himatsingka Auto Enterprises Banderdewa GG059803 7-6-83 AD/V/C 09289 31-12-82 4,56,429 28. Himatsingka Auto Enterprises Banderdewa GG059659 10-5-83 AD/V/C 10062 8-1-83 1,43,763 29. Himatsingka Auto Enterprises Banderdewa GG059660 19-8-83 AD/V/C 10186 25-1-83 4,51,92 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Andaman Motors (P) Ltd Andamans T162394 29-3-82 9273 31-12-82 1,69,725 43. Andaman Motors (P) Ltd Andamans T162397 29-3-82 44. Andaman Motors (P) Ltd Andamans T165006 26-8-82 45. Doddanavar Brothers Belgaum G263176 26-8-82 16-8-82 2,25,123 46. Sundaram Automobiles Akola Y313621 8053 11-11-82 6,02,743 47. Himatsingka Auto Enterprises Subansisi GG069288 48. Himatsingka Auto Enterprises Subansisi GG069289 1-8-84 100114 2-5-84 1,84,297 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GG073693 19-4-85 100864 11-8-84 1,16,487 61. Himatsingka Auto Enterprises Subansisi GG073694 19-4-85 100837 10-8-84 1,16,487 62. Himatsingka Auto Enterprises Subansisi GG073695 19-4-85 100791 2-8-84 1,16,487 63. Himatsingka Auto Enterprises Subansisi GG075327 1-8-85 101196 13-8-84 2,16,935 64. Himatsingka Auto Enterprises Subansisi GG075326 1-8-85 101165 7-9-84 2,16,935 65. Himatsingka Auto Enterprises Subansisi GG075325 1-8-85 101240 19-9-84 1,17,262 66. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48 24-1-85 101701 8-11-84 1,54,098 78. Himatsingka Auto Enterprises Subansisi GG073149 24-1-85 101704 8-11-84 1,54,098 79. Himatsingka Auto Enterprises Subansisi GG073150 24-1-85 101706 8-11-84 2,16,935 80. Himatsingka Auto Enterprises Subansisi GG073576 26-2-85 1017054 8-11-84 2,16,935 81. Himatsingka Auto Enterprises Subansisi GG073578 26-2-85 102046 10-12-84 1,54,872 82. Himatsingka Auto Enterprises Subansisi GG073579 26-2-85 102098 14-12-84 1,54,872 83. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-8-85 103629 29-3-85 1,60,132 95. Himatsingka Auto Enterprises Subansisi GG075337 1-8-85 103628 29-3-85 1,60,132 96. Himatsingka Auto Enterprises Subansisi GG075336 1-8-85 103627 29-3-85 1,60,132 97. Himatsingka Auto Enterprises Subansisi GG075335 1-8-85 103626 29-3-85 1,60,132 98. Himatsingka Auto Enterprises Subansisi GG075334 1-8-85 103625 29-3-85 1,60,132 99. Himatsingka Auto Enterprises Subansisi GG075333 1-8-85 103624 29-3-85 1,60,172 100 Himatsingka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29-10-83 112. Andaman Motors (P) Ltd. Port Blair T172464 29-10-83 113. Andaman Motors (P) Ltd. Port Blair T172462 20-10-83 114. Andaman Motors (P) Ltd. Port Blair T174926 8-3-87 115. Himatsingka Auto Enterprises Subansisi GG124703 24-12-92 101601 30-11-85 3,81,221 116. Himatsingka Auto Enterprises Subansisi GG170760 9-11-97 102613 3-8-85 1,32,639 117. Himatsingka Auto Enterprises Subansisi GG124702 24-12-92 100799 29-8-85 1,36,802 118. Hima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions, which is not sufficient to me to accept. 12. The records in the form of invoices, etc., also clearly show that goods were sold at the factory gate to dealers outside Bihar also, and not only to dealers in Bihar, and the documentary evidence will override the oral evidence in the form of officers statements. We, therefore, hold that the Commissioner s finding that sales at factory gate took place only to dealers in Bihar is erroneous. 13. Regarding the plea of res judicata, the appellants are correct in contending that the decision of the Hon ble Patna High Court dated 5-1-77 in Writ Petition 704/1976 [1977 (1) E.L.T. (J 14) (Pat.)] and upheld by the Supreme Court by its order dated 23-4-79 holding that the price at which the goods were sold at the factory gate should be adopted for ex-RSOs sales and rejecting the Revenue s stand that goods sold through RSOs should be assessed on the basis of ex-RSOs price less transportation charges, operates as res judicata. In the present impugned order, the Commissioner has observed that the principles of res judicata is not applicable as new facts have come into light viz. that sales at the factory gate were made only to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-10-98, the amount to the extent of 50% of the prevailing :Labour Rates , prescribed by the TELCO themselves from time to time. (B) In respect of MVCs which were sold to the dealers of outside Bihar at the ex-RSO NDP price for delivery at the RSO : In such cases, the ex-RSO NDP price was not the sole consideration of sale. Hence in such cases the assessable value should be determined in terms of Section 4(1)(b) of the said Act read with Rule 5 of the Central Excise (Valuation) Rules, 1975. Accordingly, in such cases, the assessable value should be based on the aggregate of such ex-RSO NDP price and the money value of the following additional considerations flowing from the dealers to the TELCO, by applying the principles laid down in Rule 5 of the Central Excise (Valuation) Rules, 1975 :- (i) in the case of PDI and After Sale Services, prior to 1-4-98, the amount equivalent to the prevailing Labour Rates , prescribed by the TELCO themselves from time to time, and (ii) in the case of Warranty, prior to 1-10-98, the amount to the extent of 50% of the prevailing Labour Rates , prescribed by the TELCO themselves from time to time and the impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner (Appeals) having upheld the adjudication order, the appellants had filed an appeal before the Tribunal which by its order cited (supra), set aside the order of the lower Appellate Authority after considering the submissions of the Revenue regarding flow back to the assessee and rejecting the same. The Revenue filed an appeal to the Supreme Court; the appellants filed a counter affidavit explaining their marketing pattern, after sales service and PDI provided by the dealers, specifically submitting that they did not collect any amount from the dealers for providing free alter sales service. After considering the issue and looking into the owner s manual and service book and other relevant papers, the Apex Court dismissed the Revenue appeal as it was not satisfied that there was any payment in regard to labour for the free service rendered by the dealers to motor vehicles manufactured by the appellants. We find that the dealership agreement considered by the Tribunal earlier for the appellants Pune factory is similar to one in the present case and therefore, applying the ratio of the Tribunal s earlier order, as upheld by the Supreme Court, we hold that this duty deman ..... X X X X Extracts X X X X X X X X Extracts X X X X
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