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CUSTOMS, EXCISE AND GOLD (CONTROL) APPELLATE TRIBUNAL, NEW DELHI
M. Gouri Shankar Murthy, K.L. Rekhi, JJ.
Kerala State Detergents and Chemicals Ltd. -Appellant
Versus
Collector of Central Excise, Cochin -Respondent
Order No. 823 of 86-A, 823 of 1986
Decided On : 30-09-1986
M. Gouri Shankar Murthy, Member (J)
1. The material facts in this appeal (heard along with Appeal No. E/2747/85-A) are -
(a) the appellant filed a price list No. 4/79 dated 11-12-1979 to be effective from 14-12-1979, disclosing, inter alia, the price at which the goods, in question, namely, detergent cakes, are ordinarily sold and declaring, in particular, the normal trade discount to be nil. The assessable value declared was in a sum of Rs. 149.07 per 108 cakes;
(b) a notice dated 5-11-1980 alleging, inter alia,
(i) sales at a price higher than the one declared in the price list w.e.f. 3-1-1980,(ii) consequent increase in the assessable value of the goods in question - Rs. 154.19 instead of Rs. 149.07 as originally declared - resulting in differential duty in a sum of Rs. 42,825.09 during the period between 3-1-1980 and 30-4-1980, and requiring the appellant to show cause as to why the aforesaid demand for differential duty should not be confirmed and recovered and a penalty levied in terms of Rule 173Q of the Central Excise Rules, 1944, was issued;
(c) in reply, the appellant submitted, inter alia, that
(i) the clearance of goods was only on the basis of the assessable value declared in the aforesaid price list,
(ii) the declaration of the assessable value therein was on the basis of the rule enunciated in the judgment of the Hon'ble Supreme Court in 1977 ELT 177 (A.K. Roy v. Voltas Ltd.) and Ors. decisions of the various High Courts to wit, the manufacturing cost and manufacturing profit,
(iii) they had, of course, recovered certain post manufacturing expenses/distribution costs shown separately in the invoices for the relevant period but these cannot form part of the assessable value, and
(iv) in that view of the matter had acted within the Central Excises and Salt Act, 1944, Act and the Rules and have accordingly committed no offence;
(d) a "revised notice", alleging
(i) a further enhanced assessable value at Rs. 162.76 per 108 cakes (for the period between January, 1980 and May, 1980) on account of the addition of the post manufacturing expenses and distribution costs realised by the appellant as well as the discount granted by the appellant,(ii) a consequent enhancement in the differential duty (Rs. 1,41,141.33 instead of the original demand of Rs. 42,825.09), and requiring the appellant to show cause as to why the short levy as worked out in the revised notice "should not be demanded by confirming this revised notice" was issued on 1-8-1984;
(e) in a reply dated 4-9-1984, the appellant stated, inter alia, that –
(i) in submitting the aforesaid price list, they were solely guided by the ratio of the decision in the Voltas case 1977 ELT 177.(ii) accordingly, the price list had revealed merely the manufacturing cost and duty thereon and they had shown "the extras under the head post manufacturing expenses and distribution expenses in the invoices concerned."(iii) "as the judgment was binding on all concerned, we thought it prudent on our part to furnish only the manufacturing cost for purposes of assessment and got it approved initially. The rest, such as trade discount, freight, and distribution expenses were all treated as post manufacturing expenses on which exemption was claimed while arriving at the assessable value. These items were shown separately in the invoices",(iv) ""now, in view of the amendment to Section 4 and subsequent judgment of the Supreme Court in May, 1983, the Department has revised the assessments made from January, 1980",(v) the demand was inflated in the revised demand since the trade discount and average freight had not been excluded. It is but fair that the appellant should be accorded the benefit of such exclusions in line with spirit of the recent judgment of the Supreme Court;
(f) in adjudication, it was held that the demand in the notice to show cause dated 1-8-1984 was confirmed subject, however, to deduction of "average freight included in the price for the relevant period";
(g) in appeal, it w
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