ORDER
K. Sreedharan, J. (President)
1. These two appeals are at the instance of the Revenue. They challenged the Orders-in-Original passed by the Commissioner of Central Excise, Meerut. Order-in-Original No. 69/95 dated 15-12-1995 passed by the Commissioner is under challenge in E/78/97. Following the Order-in-Original No. 69/95, the Commissioner passed Order-in-Original No. 15/96, dated 30-3-96. That order is questioned in appeal E/1144/97. In Order-in-original No. 69/95 the period dealt with was from November, 1994 to February 1995. Period from August 94 to October 94 was dealt with in Order-in-original No. 15/96.
2. Respondents in these appeals were manufacturing Acrylic Fibre Tow and Top. They were selling their produce at different prices to dealers in wholesale sale. On the basis of the price realised from the dealers they paid excise duty under Section 4(1)(a) of the Central Excise Act. Department took the view that the manufacturer was giving discount at different rates to different buyers, though the price of finished goods to be the same for each and every buyer. Department was of the further opinion that discount was being given by the assessee without any regard to the quantum of goods sold to the dealer, remoteness, proximity of the buyers from the factory and prompt payment. It was also seen that discount had not been given to all the buyers. Further it was revealed that the same dealer was not being given discount on all occasions. The rates of discount suddenly increased for a period from 27-12-1994 to November 1995 for most of the buyers. This was raised after introduction of ad valorem rate of duty in place of specific rate of duty. The Department was of the view that discount was not given in accordance with the normal practice of wholesale trade in terms of Section 4(4)(d)(ii) of the Central Excise and Salt Act, 1944. Hence show cause notices were issued demanding differential duty payable by the assessee. The manufacturer-assessee disputed the claim made in the show cause notices contending that the prices realised was sole consideration for the sale, that there was no relationship between the assessee and the dealer/purchaser and that there was no flow back of money over and above the price charged and realised.
3. After considering the rival contentions the Commissioner observed –
“So far as the aspect of uniformity of trade discount is concerned, I find that the matter is well-settled in a plethora of case laws at all levels in all of which the finding is the same viz. that there is no need for uniformity of trade discount and the same can differ from person to person and the same has to be extended so long as the department is not able to prove that it resulted in certain extra commercial considerations or flow back of money.”
This finding was arrived at by the Commissioner in view of the decision of the Supreme Court in Metal Box case 1995 (75) E.L.T. 449 (S.C.). Reliance was also placed by him on Sphinx Precision Pot. Ltd. v. CCE, Chandigarh – 1994 (74) E.L.T. 683 (Tribunal). This conclusion reached by the Commissioner is under challenge in these appeals.
4. Under Section 4(1)(a) of the Central Excise Act, 1944, duty of excise is chargeable on the value of the goods at which it is sold to a buyer in the course of wholesale trade for delivery at the time and place of removal. So the assessable value will depend on the normal price at which the goods are sold to each buyer. Depending on that value and that value alone, duty can be assessed. This rule can be changed only when the department shows that the buyer is a related person or that the price is not the sole consideration for the sale. In the instant case, the department has no allegation even that buyers were related to the assessee or that the price at which goods were sold to each buyer was not the sole consideration for the sale.
5. In Government of India v. Madras Rubber Factory Ltd. – 1995 (77). E.L.T. 433 (S.C.). Their Lordships noted the Objects and Reasons appended to the Bill which sought amendment of Section 4. The Statement of Objects and Reasons appended to the Bill was –
“in order to overcome the various difficulties experienced in the working of the section it is proposed to suitably revise the valuation provision contained” in Section 4 of the Act, providing, as far as practicable, for assessment of excisable goods at the transaction value, except in areas where there may be scope for manipulation (such as sales to or through related persons) and making specific stipulations with respect to situations frequently encountered in the sphere of valuation.”
A reading of these Objects and Reasons will show that assessment of excisable goods should be at the transaction value. This view has been approved by their Lordships in paragraph 18 of the judgment, wherein it was observed –
“It is obvious that the value of excisable goods for the purpose of Sub-section (1) of Section 4 is ordinarily determined with reference to the normal price at which such goods are sold, i.e., under Clause (a) of Sub-section (1) of Section 4.”
From this it is crystal clear that assessment to excise duty must be on the basis of normal price at which such goods are sold to each buyer. Section 4(1)(a) refers to the price at which goods are sold by the assessee to a buyer in the course of wholesale trade. The department has no case that price realised by the assessee on sale to dealers is not the actual value. Department has no case that there was some flow back of money from buyer to the assessee. Nor have they an allegation that assessee and buyer are related. Under these circumstances, the proceedings initiated pursuant to show cause notices are contrary to Section 4(1)(a) of the Act. In these state of things, the view taken by the Commissioner in the impugned orders are unassailable. We do not find any merit in these appeals. These appeals are accordingly dismissed.