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CUSTOMS, EXCISE AND GOLD (CONTROL) APPELLATE TRIBUNAL, NEW DELHI
S. Venkatesan, M. Gouri Shankar Murthy, M. Santhanam, JJ.
Pyrites Phosphates and Chemicals Ltd. -Appellant
Versus
Collector of Central Excise, Madras -Respondent
Order No. 575/1984-A, 575 of 1984
Decided On : 26-07-1984
M. Gouri Shankar Murthy, Member (J)
1. The facts in this Appeal, in a brief compass, are :-
(a) the Appellant had been manufacturing Rock phosphate;
(b) the maximum price at which Rock phosphate could be sold was controlled in terms of the provisions of the Essential Commodities Act and the Fertilizer Control Order, 1957 during the relevant period between 14-2-1977 and 31-3-1977 and consequently its assessable value during the material time was to be ascertained in terms of Section 4a (ii) of the Central Excises and Salt Act, 1944 (the Act, in short) on the basis of such controlled price ;
(c) the Appellant would appear to have excluded the expenditure incurred in transport of the raw material (required for the manufacture of the Rock phosphate in the shape of phosphate in lumps) in the ascertainment of the assessable value of the finished product and accordingly computed the excise duty leviable, while, separately, claiming it from the customers. In other words, the price required to be recovered by the Appellant was the controlled price. Nevertheless, the expenditure in transport of the raw material was separately claimed in their invoice in addition to the controlled price. The assessable value on which duty was paid was claimed to be the controlled price, notwithstanding that something over and above such price was being realised by the Appellant ostensibly towards transport charges ; and
(d) on issue of notice dated 19-4-1977 requiring the Appellant to show cause as to why the expenditure incurred in the transportation of raw material charged from the customers, on removal of the finished product, should not be included in the ascertainment of the assessable value, the Appellant submitted, inter alia, that : -
(i) the controlled price of the goods in question was exclusive of sales tax and railway freight i.e. transport charges could not be added to the normal price to ascertain the assessable value ;
(ii) freight is a post manufacturing expense and cannot be deemed to be a part of the value for assessment purposes ; and
(iii) the Appellant had been receiving the phosphate both in powder form as well as in lumps. While the former is excisable, the latter is not. The manufacture at Salem was merely powdering the lumps received according to the specifications of the consumers and it does not always conform to the conditions prescribed in the Tariff to be liable to excise duty.
(e) in adjudication, it was held that in regard to the various clearances during the aforesaid period and mentioned in the notice to show cause, the transport charges collected from the customers were actually incurred in respect of the raw material transported to Salem and accordingly such transport charges are to be included in the assessable value ;
(f) in Appeal, the matter was remanded to the Assistant Collector with a direction that he should furnish the Chemical Examiner's test report on the goods in question to the Appellant and examine the contention of the Appellant that the goods in question were not assessable to duty under Item 14HH of the First Schedule to the Act; and
(g) not content with the aforesaid decision of the Appellate Collector, the Appellant has come up to the Tribunal to contend against the inclusion of the freight charges (incurred on the raw material) in the assessable value of the finished product, merely on the ground that the price of the latter is controlled and the assessable value cannot be anything other than the controlled price itself.
2. Before us accordingly it was only the contention relating to the inclusion of transport charges for the raw material in the assessable value that was urged by Shri Kampani, the learned Consultant for the Appellant.
3. It would appear to us on the submissions made and on perusal of the record that : -
(a) for a fact, in this case, it is not freight, actual or equalised, incurred in the transport of the excisable goods from the place of removal to the place of delivery that is sought to be
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