S.V. Maruthi, Member (J)

1. These three appeals are disposed of by a common order as the issue involved is common to all the appeals. The appeal arises out of an order-in-original of the Collector dtd. 13-12-1988, confirming a demand of duty of Rs. 17,95,580.19 and imposing a penalty of Rs. 1 lakh on DCW Ltd. and Rs. 50,000/- each on Shri A. Ramaswami and Shri G. Srinivasan, Administrative Vice President and Manager (Accounts) of the Company.

2. The facts in brief are that the appellants manufacture heavy chemicals namely, Caustic Soda, Trichloroethylene and PVC Resins. They have manufacturing units at Arumuganeri Chidambaranar District. The pattern of sales of the goods manufactured by them is:

(1) Sales at the factory gate in wholesale;

(2) Sales to wholesalers, Govt. departments, industrial establishments etc. against specific contracts; and

(3) Sales through appellants' depots and consignment agents situated at various places in the country.

The dispute relates to the assessable value of PVC resin. In respect of PVC resin, the appellants filed price lists under Part II, which was approved. While so, a show case notice was issued proposing to recover the duty of Rs. 7,99,792.2 and Rs. 10,021118.12 and proposing to impose penalty on the ground that the appellants have not disclosed the excess realisation over and above the commission paid to the consignment agents. According to the Department, the excess realisation is includible in the assessable value of the PVC resin. The appellants in their reply stated inter alia that:

"In this regard, we would also like to point out that even though we are effecting sales through our consignment agents we also have sales to direct consumers at the factory gate at more or less the same price at which the goods have been cleared for sale by the consignment agents. You will appreciate that under Section 4(1)(a) of the Act, the value on which excise duty will have to be paid will be deemed to be the normal price thereof i.e. the price at which such goods are ordinarily sold by an 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 price is the sole consideration for the same. In such circumstances, we submit that as we have a normal price at the factory at which we sell goods at arm's length in the course of wholesale trade to buyers, it is only that price that will have to be deemed to be the assessable value and duty paid thereof. The fact that even though we clear the goods at that price for sale through consignment agents; the consignment agents realise something more than the said price for taking care of their expenses, their commission etc, cannot justify your statement that it is only the amount which the commission agents realise that will have to be taken as assessable value. Courts have uniformly held that in cases where there is a sale at the factory gate to a buyer at arm's length in wholesale trade, it is only the price that will be taken note of as assessable value."

3. On a consideration of the reply, the Collector confirmed the demand. Holding that during the material time, there was no price approved under Section 4(1)(a) of the Central Excises Salt Act, 1944. Therefore, he rejected the argument of the appellant that there was an approved price under Section 4(1)(a). He further held that since the appellants were clearing the goods under Part II price list, Part II prices cannot be treated as ex-factory price under Section 4(1)(a), against which the present appeal has been filed.

4. Shri M. Chandrasekhran, appearing for the appellants submitted that they have filed a price list under Part I originally and under the instructions of the Department . . . under Part VII and again on the instructions of the Department, they started filing price list under Part II. The price list filed under Part II is in relation to industrial consumers. They have wholesale sales at the factory gate to