K.L. Rekhi, Member (T)

1. By their telegram and letter dated 29-1-1987, the appellants have requested that we should decide their appeal on merits on the basis of their written submissions. Accordingly, we have heard the learned representative of the department and perused the record, particularly the written submissions of the appellants.

2. The facts, in brief, are that the appellants carry on the business of processing and manufacture of blended and compounded lubricating oils and other specialty oils (the finished goods) in Calcutta. These goods fall under item 11B of the Central Excise Tariff and were chargeable to duty ad valorem. For the manufacture of these goods, they received Lube base stocks and other mineral oils (the raw materials) from outside Calcutta. The raw materials, on entry into Calcutta, were liable to entry tax or octroi. But the collection of this tax was postponed and made at the time of exit of the finished goods from their factory for consumption within Calcutta area. The lower authorities have held that the octroi on the raw materials, even though collected later, was a part of the price of the raw materials and it should, therefore, form a part of the assessable value of the finished goods. The appellants pleas that they show the octroi charges separately in their invoice for the finished goods, that as per the contract the buyer has to bear these charges and that, therefore, such charges have nothing to do with the sale price of the finished goods.

3. On careful consideration, we find that the stand of the lower authorities is correct. The price of the finished goods has to include the full cost of the raw materials and the tax payable on the raw materials is certainly a part of their cost. Under Section 4(4)(d)(ii) of the Central Excises and Salt Act, 1944, the appellants are entitled to ask for exclusion of the taxes paid on the finished goods, which are the subject of assessment, but not of the taxes paid on the raw materials which go into the manufacture of the finished goods, vide Order No. 700/1986-A dated 28-8-1986 passed by this Tribunal in Appeal No. E-2884/84-A of M/s Khaitan Fans (P) Ltd. This order received confirmation of the Hon'ble Supreme Court when the appeal filed by the assessee (Civil Appeals Nos. 106-107 of 1987) was dismissed by a Full Bench of the Supreme Court on 10-2-1987.

4. In the circumstances, we find no merit in the appeal and reject it.