I.J. Rao, Member (T)

1. The question to be decided in all these appeals relates to valuation. The basic facts are that M/s. Fenner (I) Ltd. (Fenner for short) manufacture, among other things V-belts. They sold some of the V-belts at the factory gate paying duty on the basis of approved price list and the remaining belts they sold through their depots. At these depots they sell not only V-belts manufactured by them in their Madurai Factory but also V-belt's manufactured by BMF Beltings Ltd., Hyderabad (BMF for short) a sister concern of theirs. By two separate orders impugned before us the Department wanted to revise the assessable value of the V-belts sold to the sales depots (having been manufactured by the two Units). Inter-alia, some penalties were also imposed and differential duties demanded. Hence these appeals before us.

2. We heard Shri V. Lakshmikumaran, the learned Advocate for the appellants and Shri L. P. Asthana, Jt. CDR for the respondent Collector.

3. The facts in the present matter are that the show cause notice alleged that the sales from the depots were not retail in character as made out by Fenner India Ltd. but were wholesale in nature. The show cause notice, therefore, proposed to adopt the sale price prevailing at the depots (in respect of sales made through depots) for arriving at the assessable value. A total duty of Rs. 76,18,614/- was consequently sought to be demanded in the show cause notice, from Fenner (India) Ltd. While arriving at the assessable value in respect of the sales made through the depots, certain deductions towards transport charges, taxes paid and certain branch expenses were abated. The show cause notice proposed to demand duty for the period 1982-83 to 1986-87. The main thrust of the allegations in the show cause notice is that Fenner have suppressed/misdeclared information in showing that the sales from the depots were retail in character while they were in fact, wholesale in nature.

4. Shri Lakshmikumaran's main argument in these appeals is that the Department did not question the correctness of the assessable value approved for the wholesale sales effected at the factory gate, and that being the case, the Department cannot take the depot price as the basis for arriving at the assessable value in respect of the sales made through the depots of Fenner. He stated that Fenner, apart from dealing with this legal question sought to prove that the factory gate wholesale price is genuine. The learned Advocate stated that in the detailed written reply and the written submissions before the Collector during the personal hearing, the appellants filed detailed submissions to prove that if the permissible deductions are deducted from the depot price the net sales realisation from the depot will be less than the assessable value already approved in respect of factory gate wholesale sales. The advocate stated that the appellants contended that the Department took into account the total sales realisation from the depots which included not only the sales of V-belts made by Fenner but also V-belts made by BMF and sold to Fenner as alleged in the show cause notice issued to BMF. The learned Advocate stated that the appellants' plea is that from the total gross sale price realised by a Depot of Fenner, the Department should deduct the value of the 'traded' goods i.e. V-belts bought from BMF and sold by the depots. It was seriously contended on their behalf that if the value of the traded belts was deducted from the total sale price realised by Fenner depot and thereafter the permissible deductions are allowed, the net realisation by the depot would be less than the original assessable value already approved. This argument was advanced to show that the wholesale price at the factory gate was not a fictitious one but a genuine one. Shri Lakshmikumaran stated that Fenner also placed material to establish before the Collector that the show cause notice while calculating the duty demand for various dep