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M/s. D.J. MALPANI Versus COMMISSIONOER OF CENTRAL EXCISE, NASHIK

2015 (7) TMI 1118 - SUPREME COURT

Valuation - inclusion of Dharmada collected by the appellant - assessable value under Section 4 of the Central Excise Act, 1944 - Conflicting judgements in the matter of Bijli Cotton Mills (P) Ltd. Hathras, District Aligarh [1978 (11) TMI 1 - SUPREME Court] and Tata Iron & Steel Co.Ltd. [2002 (10) TMI 93 - SUPREME COURT OF INDIA] - Matter referred to larger bench. - CIVIL APPEAL NO.5282/2005 - Dated:- 29-7-2015 - A.K. SIKRI AND ROHINTON FALI NARIMAN JJ ORDER: Appellant is a manufacturer of goods .....

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value under Section 4 of the Central Excise Act, 1944 (hereinafter referred to as the Act ) and raised the demand of duty, penalty, interest etc. for the periods April,1997 to April,1998 and April,1997 to March, 1998. This resulted in passing of the order dated 08.01.1999 by the Adjudicating Authority holding that Dharmada collected by the appellant was used only for charitable purposes and hence the said charges were not trading receipts and, therefore, could not be included in the assessable v .....

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a result dropped the entire demand raised by show cause notices. After a lapse of one year, another show cause notice dated 03.08.2000 was issued by the Deputy Commissioner of Central Excise and Customs relying upon Section 4 of the Act whereby he called upon the appellant to show cause as to why central excise duty be not recovered from it under Section 11A of the Act read with Rule 9(2) of the Central Excise Rules,1944 and further called upon the appellant to show cause as to why penalty under .....

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ected the Assistant Commissioner, Central Excise to file an appeal against the order dated 26.02.2002. Appeal was filed and the Commissioner (Appeals) allowed the appeal of the Department and held that Dharmada collected by the appellant would form a part of transaction value for the sale of goods. Aggrieved, the appellant went in appeal before the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as the Tribunal ), which vide its impugned order and judgment dated 06.01 .....

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ces is to be included in the price for arriving at transaction value. We may point out at the outset that the Tribunal has followed the judgment of this Court in Collector Vs. Panchmukhi Engineering Works [2003(158) ELT 550 (SC)], wherein this Court has specifically held that the 'Dharmada' charged by the assessee is includible in the assessable value. A perusal of the aforesaid decision would indicate that it is a short order running into four paragraphs which follows earlier decision o .....

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ed to add such surcharge to the ex-works price to generate money for Steel Development Fund, to implement schemes entrusted to Committee by the Central Government etc. This addition to the ex-works price was in the nature of surcharge levied by the Steel Plants to generate funds for the said Committees. Therefore, the said surcharge effectively was imposed by the Committee and went to the Committee for use in its various schemes or for the expenditure incurred towards discharge of Committee' .....

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d not be regarded as a tax and was part of the price as under the statutory provisions the Committee was entitled to fix the price and other charges in addition of the price which are also part of the sale price. Both these questions are not involved in the present case. In the present case, the issue involved is whether the Dharmada collected by the appellant, which is clearly an optional payment made by the buyer, can be regarded as part of transaction value for the sale of goods. These paymen .....

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t there were material differences between 'Dharmada' and the elements /surcharge being considered in Tata Iron & Steel Co. (supra) Ltd., which are as follows: i)Whereas, Dharmada receipts are charity receipts and the Assessee has got no right to the same as the same are only used for charity, the surcharge imposed by steel plants was ultimately used for implementing schemes formed to benefit the steel plants themselves. Therefore, there was an element of direct/indirect benefit of th .....

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Dharmada, the Assesses were merely acting as conduits or clearing houses for passing the amounts collected as Dharmada, the money so collected as Dharmada was to be used for charitable purposes only, in the case of surcharge levied by the steel plants, even though the surcharge went to the Committee it was ultimately used for the benefit of the plants and the development as a whole of the business of manufacture and sale of steel. He further pointed out that insofar as issue of inclusion of ' .....

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