S.S. Sekhon, Member (T)
1. The appellant manufactures Decorative Laminates and had been filing price list on the basis of factory gate sales. The appellant also sells the goods through depots, With effect from 1.4.94 declarations were filed under amended Rule 173C. Alongwith the price list the Appellant also filed the questionnaire clearly showing that both factory gate and depots sales existed. The declarations also contained the nature and amount of deductions claimed from depot sales. Five show cause notices dated 27.10.94, 15.11.94, 10.1.95, 3.2.95 and 2.5.95 were issued by the jurisdictional Assistant Commissioner seeking to disallow certain deductions claimed in the declarations filed from 1994 onwards by the Appellant and finalise the assessment.
2. Show cause notice dated 31.1.96 was issued by the Commissioner covering the period 1.1.91 to 31.3.95 seeking to demand differential duty on the ground that for the entire period only the depot price and not the factory price will form the basis for determination of assessable value and deductions claimed from the depot price cannot be allowed. Penal provisions were also involved in the show cause notice. It may be noted that there was an overlapping of the period covered in the show cause notices issued by the Assistant Commissioner and the Commissioner. The Commissioner has passed the impugned order against which appellant has come in appeal before us.
3. We have heard Shri Sridharan, Ld. Advocate for the appellants and Shri S. Kannan for the department and after considering the submissions made and the grounds taken in appeal and the cross-objections we find:
(a) The appellant argued that the SCN (was) without jurisdiction and could not be proceeded for the reasons (1) finally assessed RT-12 copies for the period 1991-93 were not given (2) the final assessment had taken place during 1993-95 and (3) the jurisdiction Assistant Commissioner had issued SCN covering the period from April ’94 to Dec ’94 on the same issue without making allegation of suppression & two parallel proceedings were initiated by two different authorities on the same issue.
(a. i) As regards point (1) during the period 1991-93 no specific provisional assessment order was issued with regard to assessments of goods cleared in terms of Part-1 price lists filed under Section 4(1)(a) of the Central Excise Act, 1944. Mere non-returning of assessed copies of RT 12’s cannot be a ground to state the assessment is provisional.
(a. ii) The assessment for the year 1993-94 in respect of goods cleared in terms of Part-I were made final. The appellant submitted that they were served with provisional assessment order on 10.7.95 and they ignored the order stating that the provisional assessment order can only be prospective and not retrospective. Therefore, the appellant has not disputed the assessment for the period 1993-94.
(a. iii) 1994-95 invoice system introduced filing of price lists dispensed with the appellant filed Annexure II format under protest claiming the existence of normal price in terms of Section 4(1)(a). As submitted in the cross-objections, it is verified from assessed RT 12’s and provisional assessment order issued, they pertain to issue of Annexure II declarations and clearances in terms of Section 4(1)(a) prices were assessed finally and the SCN was pertaining only to abatements claimed in respect of Annexure-II declarations and the same has not connection with this issue.
(b) The appellant in his reply stated that the present action to be finalisation of provisional assessment and requested that no penalty can be imposed on finalisation. Therefore, we do not find any bar to the proceedings before the Commissioner.
(b. i) The main issue involved is whether the assessee is having a normal price in terms of Section 4(1)(a) of Central Excise Act, 1944 or not. The facts is, the appellant claimed normal price in terms of Section 4(1)(a) of the said Act and filed price lists in Part-I proforma.
(b. ii) If such goods are sold at different prices to different classes of buyers each such price be deemed to be normal price of such goods in relation to each such class of buyers (subjected to the existence of the other circumstances specified in Section 4(1)(a)).
(b. iii) The appellant stated that they have clearance at factory gate in terms of Section 4(1)(a) of the Act satisfying the conditions that these sales made (1) the course of wholesale trade (2) the sale was not to a related person (3) the sale was on principal to principal basis or at arms length. The appellant further submitted that department has not contested the sales made at gate and hence they factory gate sales in terms of Section 4(1)(a) and therefore going to depot sale price for determination of assessable value does not arise.
(b. iv) From the submissions of appellant it was observed in the order that they have claimed the sale of goods to public sector undertaking and wholly owned Government companies in terms of Section 4(1)(a). But sale in respect of such class of buyers can be considered as normal price only in respect of such classes in terms of first proviso to Section 4(1)(a) of the said Act. The above position appears to be upheld by the Hon’ble Supreme Court in the case of Government of India v. MRF 1995 in the Civil Appeal 3195 of 79.
(b. v) The SCN alleges that the sales are restricted at the factory gate and the sales as shown at the factory gate are created as the sales in terms of Section 4(1)(a) though they are the sales in terms of proviso to Section 4(1)(a) of the said Act. Shri K. Prabhakar, Manager, Decorative in his statement submitted that they generally stock transfer the goods from the factory to various depots and there are instances where the dealers buy directly from the factory at negotiated contract prices and such contract supplies are also made through dealers in cases of some project orders where a negotiated price is arrived at, but we prefer not supply to the contractors directly for commercial reasons. However, the Tribunal in the case of Synpro Industries 2000 (40) RLT 507 has held as under:
3. It is clear from the records that Part-II proforma sales were contract sales. It is settled law that such prices would rightly constitute the assessable value in respect of those goods and that the Part I prices, covering the normal price at which goods are sold to dealers, would have no application for the assessment of goods sold on contract basis.
Therefore, the valuation claim of the appellants at factory gate price need to have a re-look since the appellants have submitted that there are many wholesale buyers at the factory gate besides the PSU. A chart given by them was not considered. If that be so, the matter requires to be re-looked into since 3% sales at factory gate have been considered to be adequate to justify the application of that value for clearing to depots, if no evidence of such ex-factory price being genuine is determined (Geep Industrial Syndicate Ltd. 2000 (40) RLT 638. Therefore, we find that it was incumbent upon the Commissioner to have dealt with the data submitted and apply the same, if that value cannot be doubted. The matter is required to be set aside and remanded back for De novo adjudication. It is only after such sales ex-factory are found to be non-genuine then we can proceed to the ex-depot price and determine the abatements from such ex-depot prices and not before disproving the ex-factory prices. Since valuation for removal to depots has to be under Section 4(1)(b) the Valuation Rules and the rules are to be applied seriatim.
(c) M/s. Bakelite Hylam claimed the following abatements:
(a) Freight on Stock Transfer
(d) Cash Discount
(e) Turnover tax
(f) Sales Rebate
(g) Packing Expenses at Depot
(h) Interest on Inventories — Depot
(i) Interest on Receivables
(j) Freight on sales
No findings are arrived at on the eligibility of these discounts since we are remanding the matter back.
4. In view of our findings, we would remand the matter to the Commissioner after setting aside the order with a direction that he shall first come to a clear cut findings of absence of a genuine ex-factory price on the basis of material produced by the appellants and the material on record and apply such value. In case, he comes to a finding that such a genuine ex-factory price is not available, then he can proceed to determine the value by granting deductions from the depot prices available after giving an opportunity to the appellants and applying the law on the subject of eligibility of various discounts. With these directions appeals are allowed as remand for de novo adjudication.