TMI Blog2000 (5) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... undred four only) for the period February 1990 to June 1994 on the following grounds. Undervaluation i.e. difference in price between ex-factory and ex-depot. Non-inclusion of cost of advertisement expenses incurred by one of its distributors. Non-exclusion of interest free deposit in the assessable value made by one of the distributors. On substitution of the grade of plywood. 2.2Apart from proposing confirmation of demand of duties on the above counts, notice also proposed imposition of penalty upon the appellant as also upon the Managing Director of the respondents company. 2.3The respondents filed a reply to the above show cause notice before the Commissioner and contended in respect the charge of under-valuation that inasmuch as there was factory gate sales price approved by the proper officer under the provision of Section 4(1)(a), the same price has to be adopted for the purposes of duty of Central Excise in respect of the sales made through their depots/branches which are situated all over the country. It was contended by the respondents that bills of depots were being submitted by them regularly to the Central Excise authorities for finalisation of price lis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dropped the charges of under-valuation. 2.5 After considering the submissions made by the appellants, the Commissioner accepted the appellants' contentions as regards the adoption of assessable value at the factory gate for the sales made through their depots or branches. Accordingly she held the stand of the department for raising differential amount of Rs. 18,47,91,347/- as unsustainable for the reasons that the ex-factory price declared by the assessee has to be accepted by applying the ratio of the Hon'ble Supreme Court's judgment in the case of Indian Oxygen v. C.C.E. - 1988 (36) E.L.T. 723, inasmuch as the department has failed to prove its charge of the said price being artificially low by way of documentary evidence. For arriving at the above finding she has observed that the department has not been able to prove by documentary evidence that there was flow back of money so as to reject the ex-factory sales price. She has also observed that the private costing recovered during the search cannot form the basis for arriving at the correct value for all goods manufactured by M/s. Kitply and multiplying the entire clearance as reflected in RG 1/RT 12 of the company by the hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessed at the factory gate sales price. Accordingly, the Tribunal set aside a portion of the impugned order passed by the Commissioner of Central Excise, Shillong confirming demand of duties on advertisement expenses incurred by the dealer and the notional interest on the interest free deposits by the dealer. The said order of the Tribunal was appealed against by the Revenue before the Hon'ble Supreme Court. Vide order dated 13-1-2000, the Hon'ble Supreme Court after hearing the counsels for the parties and after condoning the delay in filing the appeal by the Revenue dismissed the appeals. 3.Arguing on the appeal Shri N.C. Roychowdhury, ld. Sr. Advocate and Shri Prantosh Mukherjee, ld. Advocate appearing for the Revenue drew our attention to the grounds of appeal. Ld. Advocate contended that as more than 90% of the sales are through their depots, the normal factory gate sale price should not be accepted which in any case was found to be very low, at times. It is further argued that the cost structure, as reflected in the show cause notice shows that the assessable value at the factory gate was on the lower side. When questioned that the cost data relied upon by the Revenue was i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s v. CCE - 1989 (40) E.L.T. 86 (T) (i)Mahalakshmi Glass Works v. CCE - 1991 (53) E.L.T. 120 (T) (j)Modern Threads Ltd. v. CCE - 1999 (33) RLT 462 (T) (k)Racold Appliances v. CCE - 1994 (69) E.L.T. 312 (T) 5.He also drew our attention to the following decisions in support of his submission that merely because the depot prices are higher than the ex-factory, ex-factory price cannot be rejected on this ground alone : (a)Easter Industries v. CCE - 1996 (81) E.L.T. 260 (T) (b)Indian Oxygen v. CCE - 1988 (36) E.L.T. 723 (S.C.) 6.It was the contention of Shri Laxmikumaran that when ex-factory price is available, it is not permissible to the department to look into the ex-depot prices as per the ratio laid down by the Hon'ble Supreme Court in the case of Indian Oxygen. There is no obligation on the part of the assessee to furnish information about the ex-depot price or the price at which he would be selling from the depots. He referred to the following decisions in this regard. (a)CCE v. Moti Laminates (P) Ltd. - 1997 (96) E.L.T. 191(T) (b)Ester Industries v. CCE - 1996 (81) E.L.T. 260(T) (c)Indian Oxygen Ltd v. CCE - 1988 (36) E.L.T. 723 (S.C.) 7.Shri Laxmikumaran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Baroda v. Cotspun Ltd. - 1999 (113) E.L.T. 353 (S.C.) = 1999 (7) SCC 633, the Hon'ble Supreme Court has rejected the Revenue's appeal by observing that as the clearances in question during the period involved were made on the basis of approved price lists, the appeals filed by the Revenue have to be dismissed. As such he submits that by following the ratio of the said judgment the Revenue's appeal be dismissed on the point of limitation also. 9.We have considered the submissions made from both the sides. The Revenue's main contention is that the declared assessable value at the factory gate is not genuine inasmuch as 90% of the sales are through depots and the factory gate sales only represents 10% of the total production. We find that this ground by itself is not sufficient to discard ex-factory price as has been the ratio of the Hon'ble Supreme Court in the case of Indian Oxygen, subsequently followed by the various judicial and quasi-judicial authorities in a number of cases, as detailed by the ld. Advocate Shri Laxmikumaran. The Revenue has sought to label the said ex-factory price as not genuine on the ground of the cost structure of the assessees' unit. Firstly we observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the Art unit. As such keeping in mind the factors that costing was not required to be verified at all in view of the availability of the ex-factory prices and the costing done by the Revenue in respect of the other two units having been found to be correct, we hold that the non-verification of the costing done at the Art unit will not substantiate the charges of under-valuation initially raised in the show cause notice by the department and cannot be made a factor for setting aside the order of the Commissioner. 10.We also feel strengthened in our above view by the fact that the earlier order of the Tribunal passed on the appeals filed by the assessees against the same order, the Tribunal has observed that as ex-factory price list stands approved based upon the factory gate sales to independent buyers at the place of removal, the provisions of rule 6(b)(ii) of the Central Excise Valuation Rules, 1975 cannot be adhered to. The third Member, while passing orders on the assessees' appeals has observed in para 13 that the declared assessable value under Section 4(1)(a) was found to be correct and acceptable by the Commissioner. The said order of the Tribunal has since been conf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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