Per Justice U.L. Bhat :

Order-in-Original No. 5/90 dated 24.10.90 passed by the Collector of Central Excise, Rajkot is challenged in this appeal.

2. Appellant, engaged in the manufacture of ceramic tiles in the factory near Rajkot in Gujarat, was effecting sales in wholesale to dealers within the State of Gujarat at the factory gate, stock-transferring goods from the factory to the branch at Bombay from where sales were made to dealers within the State of Maharashtra, stock transferring goods to certain consignment agents at Indore and Cochin through whom goods were sold to wholesale dealers within the States of Madhya Pradesh and Kerala respectively. Three price lists were filed in Part I, one in respect of Gujarat disclosing no trade discount, one in respect of Madhya Pradesh and Kerala claiming deduction of 8% trade discount and another in respect of Maharashtra claiming deduction of 3% trade discount. On approval of the price lists clearances were made on payment of appropriate duty. Enquiry showed that in regard to Madhya Pradesh and Kerala, prices collected from wholesale dealers were higher than the approved prices. It was also found that in regard to sales in Maharashtra appellant collected charges for transportation, insurance and incidental expenses in excess of the amounts spent actually and without paying central excise duty on the differential amount.

3. Show cause notice dated 4.5.90 was issued reciting the above facts, alleging wilful suppression of material fact with intent to evade duty and proposing demand of differential duty on the above basis and imposition of penalty. Though the appellant resisted the notice, the Collector confirmed the demand of Rs. 4,52,114.65 for the period from January 85 to the end of financial year 1988 in respect of goods cleared to Madhya Pradesh and Kerala and of Rs. 1,58,239.70 in respect of the clearances made to wholesale dealers through Bombay branch during the years 1985 to 1988 and imposing penalty of Rs. 75,000 for violation of Rule 173Q (1) of the Central Excise Rules, 1944. This order is now challenged.

4. Though various contentions have been raised in the Memo. of Appeal, Learned Counsel for the appellant, in the course of his submissions, pressed only two contentions. The first contention is that the additional amount recovered by the appellant had been erroneously added to assessable value but should have been treated as part of cum-duty price and assessable value should have been arrived at on that basis. The second contention is that in regard to goods transferred to Bombay branch, non-recoverable turnover tax and additional sales tax to the extent of Rs. 14,09,352 had been paid to the State Govt., that the same had not been recovered from dealers and should have been deducted from the total assessable value of all the goods including the goods sold in Madhya Pradesh and Kerala and differential duty should have been quantified on that basis. These contentions are opposed on behalf of the Department.

5. We have held in Pawan Tyres (P) Ltd., 1997 (19) RLT 66 (T) that the excess amount realised by the manufacturer should be treated as cum-duty price and assessable value should be arrived at by deducting the duty element which has not been collected from the buyer. To the same effect are the decisions in the cases of Geep Industrial Syndicate Ltd. 1995 (80) ELT 341 (T) and Krishna Industrial Chemicals Ltd. 1997 (21) RLT 853 (T). Shri K. Srivastava, SDR placed before us order No. 440/87-B1 dated 25.1.87 which takes a contrary position. This decision did not consider the effect of Section 4 (4) (d) (ii) of the Central Excise Act, 1944, according to which central excise duty has to be deducted from the cum-duty price to arrive at the assessable value. Cum-duty price is the price collected from the buyer where duty is not separately collected. The excess amount realised by the manufacturer is part of cum-duty price since duty on that amount has not been separately collected