TMI Blog1991 (7) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... le to dealers and customers take place. The Company makes all sales ex-factory in the course of wholesale trade in large bulk entirely on a principal to principal basis and the same are evidenced by conditions of sale which represent normal commercial arrangements. The transactions between the Company and the wholesale dealers are at arm's length and in the usual course of business and do not involve any consideration other than the price of the goods. 2. The manufacture of welding electrodes is liable to payment of duty in accordance with Tariff Item No. 50 of the First Schedule to the Central Excise Tariff and ad valorem excise duty is payable in accordance with the assessable value approved by the Excise Authorities. The Company was manufacturing welding electrodes since the year 1954 and till the beginning of year 1980 submitted price lists to Excise Authorities. It is the claim of the Company that the post-manufacturing expenses incurred towards freight, sales promotion, advertisements were erroneously included while determining the assessable value with the result that the excess duty was paid to the Department. The Company claimed that the excess duty paid is liable to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the pendency of the Petition, the Supreme Court delivered judgment in the case of Union of India v. Bombay Tyre International Limited reported in 1983 (14) E.L.T. 1896 examining the entire ambit of the issue of post-manufacturing expenses. The Supreme Court subsequently issued clarificatory orders from time to time laying down the principle for determining the assessable value of manufactured article for the purpose of payment of excise duty. After the decision of the Supreme Court, the Petition was posted before one of us (Pendse J.) on December 14,1983 and directions were issued to the Assessing Authority to permit the Company to submit statement of deductions in respect of price-lists already filed and claim in respect of refund claims. The Company sought deductions under four headings : (1) Freight, (2) Insurance in transit, (3) Discounts and Commission, and (4) Interest on Book Debts. The Assessing Authority was directed to examine the claim with reference to the judgment and order delivered by the Supreme Court in the case of Bombay Tyre International. The Company was directed to file statements and documents in support of the claim and the Company was directed also to file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the movement of finished goods from the place of removal to the place of delivery is to be excluded while determining the assessable value. The claim made by the Company on this count is turned down by the Assistant Collector by holding that the claim was not substantiated by documentary evidence. While recording this finding, the Assistant Collector observed that the High Court directed by Order dated December 14,1983 that the Company shall produce documents as demanded by the Assessing Authority in support of their claim. The Assistant Collector observed that the Company was called upon on more than three occasions to substantiate the claim by production of all the relevant freight bills. The Assessing Authority observed that initially, the Company stated that the bills will be produced after the lockout of Bhandup factory was raised but subsequently an excuse was set up that it is difficult to produce vouchers and freight bills as demanded. The Assistant Collector had demanded the freight bills and vouchers only for the period commencing from October 21,1979 and ending with October 30,1980. The failure to produce the freight bills and the vouchers led the Assistant Collecto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tants. The circular advises that such statements may be accepted without going into much details with regard to the verification of the individual/voucher etc. Shri Desai submits that in accordance with the instructions issued in circular dated December 3, 1983, the Company had produced a consolidated statement duly verified and certified by the Chartered Accountant and, therefore, it is not correct for the Assistant Collector to turn down the claim only on the ground that each and every voucher and freight bill issued by the Company between the period October 21, 1979 and October 30,1980 was not produced. In our judgment, the submission is correct and deserves acceptance. The provisions of Indian Evidence Act make it clear that a thing can be proved by various modes and when the original documents are not available, the parties relying upon the same can certainly produce secondary evidence. The Assistant Collector could not have denied the relief to the Company only on the ground that the freight bills were not produced when the issuance of the freight bills and the existence thereof could be easily gathered by perusal of trial balance-sheets and consignor notes. It was not incumb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on on this count by refusing to examine the certificate and insisting that in absence of vouchers or receipts for payment of the insurance money, the claim could not be verified. We are unable to appreciate why the Assistant Collector felt helpless to verify the claim when the certificate issued by M/s. New India Assurance Company was produced. The Insurance Company is a Nationalized one and the Assistant Collector need not doubt the veracity of the certificate. In these circumstances, in our judgment, the Assistant Collector was in error in declining to examine the claim of the Company for deduction in respect of insurance amount paid for goods in transit. It is necessary to direct the Assistant Collector to re-examine the claim on this count, also. 6. The third claim of deduction sought by the Company is in respect of amount of discounts and commissions. Deduction was sought in respect of discounts and commissions for the entire period commencing-from year 1975-76 to year 1979-80. The Company in support of the claim produced the credit notes for verification before the Assistant Collector. The Assistant Collector by letter dated March 14,1984 called upon the Company to produce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hes the existence of the trade practice followed by the Petitioner Company over several years, then the Assistant Collector could not have refused the claim of deduction on this count. The submission is correct and deserves acceptance. The Assistant Collector could not have turned down the claim only on the basis that the invoices for the period sought by the Assistant Collector were not produced. The Assistant Collector had not addressed to the issue as to whether there exists trade practice of grant of commission and discount and whether the Petitioners followed that practice for over several years. In case the Company is able to establish such practice, then the Company is entitled to claim commission and discount in accordance with decision of the Supreme Court. In our judgment, this aspect of the matter is not examined in depth by the Assistant Collector and, therefore, refusal to grant deduction on this count is required to be set aside with the direction to the Assistant Collector to re-examine the issue in proper prospective. We make it clear that we are not accepting the claim of the Company that deduction should be granted because of existence of prior practice and that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebts is not an item in respect of which the Company can claim deduction need be disturbed. There is another stronger reason to discard the submission urged by Shri Desai on this count. The company had raised the contention about entitlement of deduction under the heading "Interest on Book Debts" by filing Writ Petition under Article 226 of the Constitution of India in this Court. The point was squarely put in issue in this position and was turned down by the decision of the Division Bench reported in 1984 (16) E.L.T. 27 (Bom.) Advani Oerlikon Limited Anr. v. Union of India Anr.. It is. not in dispute that the Company did not challenge the Order of the Division Bench by approaching the Supreme Court and the decision of the Division Bench had become final. In view of the decision of the Division Bench, it is no longer open for Shri Desai to re-agitate the identical contention in the present Petition. The doctrine of res judicata or the principle analogous to the doctrine squarely applies to the contention urged on behalf of the Company on this count. In our judgment, the finding of the Assistant Collector that the Company is not entitled to claim deduction under the heading "Int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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