ORDER
Lajja Ram, Member (T)
1. In this appeal filed by M/s. Universal Wires and Industries, Patna, the issue for our consideration is whether the drawback amount which the appellants got from the Government should be included in the assessable value of the wires and cables. The appellants were engaged in the manufacture of wires and cables. Some of the wires and cables were supplied to the State Electricity Boards. The State Electricity Boards utilised these wires and cables in the projects funded by I.B.R.D. As per Government’s directions, the goods supplied to the I.B.R.D. Projects were considered as deemed export. The Collector of Central Excise (Appeals), Calcutta had held that as the appellants got extra money in the form of duty drawback, the amounts representing the duty drawback was definitely a consideration flowing from the buyer to the assessee for which the assessee had agreed to sell the goods.
2. The matter was posted for hearing on 27-3-1996. The appellants have desired the matter to be decided on merits. On behalf of the respondents/revenue, Shri G.D. Sharma, JDR is present. Shri G.D. Sharma, the learned JDR stated that the appellants knew that they are going to get extra benefit from the sale and that they will be getting duty drawback in respect of excisable goods sold. In their Price List they did not disclose this benefit and declared their prices shorn of this extra consideration. As it was a case of a flow back and an extra consideration, this duty drawback amount should form part of the assessable value of the excisable goods – that is wires and cables.
3. We have carefully considered the matter. The appellants were engaged in the manufacture of wires and cables. In the manufacture of wires and cables aluminium conductors are used. The appellants were purchasing these aluminium conductors from the outside. Aluminium conductors are excisable and dutiable. When the wires and cables are manufactured from aluminium conductors the cost of aluminium conductor as well as the duty payable thereon had to form part of the assessable value of the finished product that is wires and cables in this case. There is no dispute that when excisable duty was paid on wires and cables at the point of clearance, the value of the raw material including the duty leviable thereon, if any formed part of the assessable value of wires and cables.
4. In the case of World Bank Aided Projects, there is a requirement that global tenders had to be floated. The Indian parties are eligible to offer their bid in such global tenders if they are otherwise eligible. With a view to encourage the Indian parties to bid for global tenders, as in the case of export benefits including duty drawback have been extended by the Government. When sales are effected in response to global tenders the sale is considered as a deemed export. Any benefit arising out of such sale cannot be considered as a flow back as the duty drawback or other export incentive are not given by the customer but by the Government.
5. The appellants have explained that the cash assistance as duty drawback was on the aluminium rod purchased on the price fixed by the Government and that their contract price was for the electric wires (conductors) and that the contract price and duty drawback had no nexus or relationship with the sale of the goods in question. The learned JDR submitted that the duty drawback had a relationship to the sale.
6. We find that the duty drawback scheme is an independent scheme and the Department of Revenue formulates the scheme in terms of the drawback rules. There are separate considerations for giving such an incentive and such incentives are not hit by the provisions of Section 4 of the Central Excises and Salt Act under which alone the assessable values had to be determined. The supplies to the IDR/IBRD Aided Projects are governed by separate instructions and the aid/re-imbursement is by the Government of India.
7. In the circumstances we are of the view that the duty drawback in the case under consideration is not required to be added to determine the assessable value of wires and cables. Accordingly the appeal is allowed.