ORDER
Lajja Ram, Member (T)
1. In this appeal filed by M/s. Caprihans India Limited, the matter relates to the inclusion of additional packing charges in the assessable value of laminated sheets. The appellants were transferring their goods to their branches where they were packed to make them suitable for sale and delivery to the independent wholesale buyers. The Collector of Central Excise (Appeals) observed that as further packing done at the branches was essential to market the goods, the argument that ex-factory price in respect of the said goods is available at the factory gate, was of no consequence. He held that the price recovered at the branches becomes relevant.
2. We have heard Shri Vinay Thakur, Sr. Manager (Excise) for the appellants. He submitted that the appellants had a factory gate price and when there was a factory gate price, the sales from the depots should also be covered by such ex-factory price. At the factory gate, no extra packing was involved and that the packing done at the depot was for subsequent despatch to outstation customers. He pleaded that as the appellants could not produce evidence about factory gate sale before the adjudicating authority and the appellate authority, the matter be remanded. In reply, Shri K. Shiv Kumar, JDR submitted that the appellate authority had discussed the matter in detail and that as in all cases the goods were delivered in packed condition, the packing charges were required to be included in the assessable value.
3. We have carefully considered the matter. We find that the Collector of Central Excise (Appeals) had observed that the appellants had not stated categorically before him that the goods in question were delivered to the independent wholesale buyers at the factory gate and they had not cited a single instance wherein the goods in question were sold and delivered to the independent wholesale buyers at the factory gate. Their submission was that they had branches all over the country and that they were required to sell the goods through branches and that the removal of the goods from the appellants’ factory to their own branches will not constitute normal sale in wholesale. Paras 4, 5 and 6 from the Order-in-Appeal are extracted below as under:
4. I have considered the submissions. In terms of Section 4 of the C.E.S.A., the place where the delivery of the excisable goods, to the independent wholesale buyers takes place is a very important factor in determining the assessable value. In the instant case, the appellants have not stated categorically that the goods in question are delivered to the independent, wholesale buyers at the factory gate. Atleast, they have not cited single instance wherein the goods in question are sold and delivered to independent wholesale buyers at the factory gate. On the contrary their submission that they have branches all over India and they are required to sell the goods through branches to promote sales gives an impression that the goods in question are not sold and delivered in wholesale to the independent buyers at the factory gate. Removal of goods in question from the appellants’ factory to their own branches, will not constitute normal sale in wholesale, for there is no delivery of the goods to the independent buyers and the property in the goods continue to be with the appellants even at the branches.
5. Further, I also do not think that the goods in question, i.e. loose laminated. sheets, individually wrapped in paper, can be delivered in wholesale trade in the condition in which they are removed from the factory unless they are further packed in different quantity/numbers as per the requirement of the normal wholesale buyers. This is what is being done at the appellants’ branches, i.e. packing of the goods to make them suitable for sale and delivery to the independent wholesale buyers. Atleast, the appellants have not cited single instance wherein the goods in question, i.e. loose laminated sheets individually wrapped in paper, without further packing, as sold and delivered to independent wholesale buyers either at the factory gate/or even at the branches. Therefore, further packing done at the branches is essential to market the goods i.e. to sell and deliver the goods in question in wholesale to the independent buyers.
6. Under the circumstances, the appellants argument that the ex-factory price in respect of the said goods is available at the factory gate, loses all its force and the price recovered at the branches becomes relevant. The cases cited and relied upon by the appellants will not be relevant as there is no wholesale sale for delivery at the factory gate and the same will not help the appellants in any way.
4. In the case of Govt. of India v. Madras Rubber Factory Limited , the Hon’ble Supreme Court had observed that whether the goods are sold through depots or whether the goods are sold at a place other than the place of removal, only the cost of transportation including insurance charges on freight were alone deductible and that no other deduction than those specifically mentioned in Section 4 of the Central Excises Act, 1944 were permissible.
5. Under Section 4 of the Act in cases where the excisable goods are delivered in packed condition then the cost of packing was to form part of the assessable value of such excisable goods. The lower authority came to a finding of fact that the goods were supplied to the wholesale buyers only in the packed condition. In such circumstances, the packing done in the depot was considered essential for marketing of the goods. The plea of the appellants that the goods were available at the factory gate had also been discussed by the Collector of Central Excise (Appeals). We do not find any infirmity in the views taken by him.
6. The amount of duty involved is Rs. 6,800/-. In the facts and circumstances of the case, we do not find any ground to interfere with the views taken by the ld. Collector of Central Excise (Appeals) in so far as the demand of duty is concerned,
7. The Asstt. Collector of Central Excise had imposed a penalty of Rs. 1,250/-, which had been confirmed by the Collector of Central Excise (Appeals).
8. Taking all the relevant facts and circumstances into account, we set aside that part of the order, which relates to the imposition of penalty.
9. Subject to above, the appeal is otherwise rejected.
Order dictated & pronounced in the Open Court on 7.12.1998.