ORDER
Jyoti Balasundaram, Member (J)
1. The main issue for determination in the present appeal which arises out of the order of the Collector of Central Excise (Appeals), Bombay is the classification of block boards for the period prior to 20-3-1990. The Assistant Collector held that the block boards would merit classification under sub-heading 4408.90 of the CETA, 1985 and based on such classification, confirmed a duty demand of Rs. 1,68,005.25. The Collector (Appeals) held that for the period in dispute block board was classifiable under sub-heading 4410.90, set aside the order confirming the demand and allowed the appeal. The appellants filed the appeal before the Tribunal praying that the classification of block boards for the period after 20-3-i990 may also be held to be under sub-heading 4410.90. They have also raised the issue about deduction of the duty element included in the price of block boards, for the purposes of arriving at the assessable value.
2. The appellants have asked for a decision on merits; hence we heard the learned DR, Shri Sharma and perused the records.
3. The issue of classification of the block boards has been settled by the judgment of the Hon’ble Supreme Court in the case of C.C.E., Shillong v. Wood Craft Products reported in 1995 {77) E.L.T. 23 (S.C.), wherein classification for the period both prior to and subsequent to 20-3-1990 has been held to be under sub-heading 4408.90. Following the ratio thereof, we hold that the product in dispute manufactured by the appellants herein falls for classification under sub-heading 4408.90.
4. Regarding the second issue, the claim of the appellants is that during the relevant period, clearance of block boards was at nil rate of duty under sub-heading 4410.90 and thus the price charged to the customers will become cum-duty price by reason of their now being required to pay duty and they are therefore, entitled to the benefit of deduction of the element of duty contained in the price of the product, in terms of Section 4(4)(d)(ii) of the CESA, 1944. We find that this submission was made before the lower appellate authority who however, has not recorded any finding thereon. In the absence of any material placed before us to enable us to give a conclusive finding on this point, we remand this issue for de novo adjudication by the appropriate authority, who shall record his findings thereon after extending a reasonable opportunity to the appellants of adducing such evidence as they consider necessary to support their claim and after extending a reasonable opportunity of being heard before passing fresh orders in accordance with law. The appeal is disposed of in the above terms.
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Jyoti Balasundaram
Member (J)
Dated: 27-3-1999
S.K. Bhatnagar, Vice President
With due respects to Hon. Member (J), my views and orders are as follows :-
5. It is observed that the appellant’s have sent a letter dated 15-3-1997 in which they have mentioned that in this appeal they had raised the question of correct classification of the block board. The Collector (A) had accepted the classification under the Heading 4410.90 for the period upto 20th March, 1990 but classified them for the subsequent period under 4408.90. However, it has since been held by the Hon. Supreme Court of India that the block boards were correctly classifiable under Chapter 4408.90 in the case of Wood Craft Products. Hence, the only issue remains to be decided is as to whether the appellants were entitled to the deduction of the element of duty included in the price and it was their contention that they had cleared the goods during the relevant period at nil rate of duty and therefore, the price charged to the customer became cum-duty price by reason of the appellants now requiring to pay duty and the appellants were entitled to the benefit of the deduction of the duty element contained in the price under Section 4(4)(d)(ii) of the Act. They have further submitted that the appeal may be decided on merits on the above issue.
6. Ld. DR stated that since the appellants had cleared the goods at nil rate of duty, there was no question of any further deduction.
7. I have considered the above submissions. I observe that classification was no longer an issue and the only point which was required to be considered is regarding the assessable value.
8. In this respect; I find that admittedly the block boards were cleared at nil rate of duty during the relevant period. Therefore, there was no question of any deduction being allowed at this stage.
9. Looking at it from a slightly different angle, even if it is hypotheti-cally considered as a cum-duty price then the component of duty being nil, only nil deduction could be allowed. Therefore, whichever way we look at it, there was no cause for interfering with the valuation on this score. The appeal is therefore rejected.
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S.K. Bhatnagar
Vice President
Dated: 18-8-1999
DIFFERENCE OF OPINION
10. In view of difference of opinion between Hon. Member (J) and the Vice President the matter is submitted to the President for reference to a third Member on the following points :-
1. Whether in the facts and circumstances of the case, the appeal was required to be rejected or the matter was required to be remanded?
Sd/- Sd/- Jyoti Balasundaram S.K. Bhatnagar Member (J) Vice President Dated 22-5-1999 Dated 18-5-1999 A.C.C. Unni, Member (J)
11. A difference of opinion had arisen between Hon’ble Members in Appeal No. E/1140/90-C filed by M/s. Ellesse Plywood Industries P. Ltd. v. C.C.E., Bombay. In the Misc. Order No. 4/98, dated 18-5-1998, ld. Member (Judicial) had, after hearing the parties, directed that the issue be remanded for de novo adjudication by the appropriate authority whereas the Hon’ble Vice President had taken a view that there was no cause for interference with the impugned order and the appeal be rejected.
12. The Difference of Opinion matter was listed for hearing before me today and I have heard Shri Jay Savla, ld. Advocate and Shri H.K. Jain, ld. SDR in the matter.
13. Ld. Advocate referred to Paragraph 4 of the order recorded by the ld. Member (Judicial) and submitted that one of the issues considered by the Tribunal (referred to as “second issue” by the ld. Member (Judicial) in paragraph (4) was the claim of the appellant that “during” the relevant period clearance of block boards was at nil rate of duty under sub-heading 4410.90 and thus price charged to the customers was cum duty price by reason of their subsequently being required to pay duty. The assessee had therefore, become entitled to the benefit of deduction of the element of duty content in the price of the product in terms of Section 4(4)(b)(ii) of the Central Excise Act, 1944. Ld. Member (Judicial) had observed that since the lower appellate authority had not recorded any finding thereon no material had been placed before the Tribunal to enable it to give a conclusive finding on this point. Ld. Judicial Member had therefore remanded the issue for de novo adjudication by the appropriate authority after observing the principles of natural justice.
14. Ld. Vice President in his separate order had taken the view that since block boards were cleared at nil rate of duty during the relevant period, the question of any deduction being allowed at a later stage did not arise. He had observed that even if it is hypothetically considered as a cum-duty price, then the component of duty being nil, only nil deduction could be allowed. In that view of the matter ld. Vice President had held that there is no case for interfering with the valuation and the appeal was accordingly rejected.
15. Ld. Counsel has drawn my attention to some decisions of the Tribunal and the Supreme Court in this connection. He has specifically referred to paragraph 9 of the Supreme Court decision in Bata Shoe Co. Ltd. v. C.C.E. reported in 1985 (21) E.L.T. 9 (S.C.) in which the scope of Section 4 of the Central Excise Act in relation to determination of value had been considered. It had been observed that under the Explanation to Section 4, it was mandatory that in determining the price of an article both trade discount as well as the amount of duty calculated as on the wholesale cash price payable at the time of removal of the article based on the wholesale cash price referred to in Clause (a) are to be deducted from such wholesale price. The Hon’ble Supreme Court had disagreed with the view taken by the High Court of Calcutta that “Section 4 only lay down the form or the principle for determination of value for the purpose of the duty” and that it had not laid down any principle or formula for the determination of value for exemption from duty. Ld. Counsel pointed out that the ratio of the said decision had been followed by the Tribunal in various cases. In this connection, he referred to Tribunal’s decision in Byco International Co. and Ors. v. C.C.E. reported in 1993 (49) ECR126 (Tribunal) in which the Tribunal had upheld the assessee’s contention that the demand of duty should be calculated on the cum-duty price i.e. after deducting the duty element from the gross sale price of the goods and not on the basis of invoice value without duty element. He had also referred to some further decisions of the Tribunal, such as, Vapi Paper Mills v. C.C.E. [1993 (67) E.L.T. 109 Tribunal)] and Indian Oxygen v. C.C.E. [1997 (89) E.L.T. 557 (Tribunal)].
16. Ld. Counsel submits that since the claim of the assessee for benefit of deduction of the element of duty contained in the price of the product in terms of Section 4 had not been considered by the Collector (Appeals) in the impugned order, the view taken by the ld. Member (Judicial) for remanding the appeal to the appropriate authority was the correct view and the view taken by the ld. Vice President in rejecting the appeal was not correct.
17. Ld. SDR Shri H.K. Jain, referred to the order recorded by the ld. Vice President in the Misc. order and reiterated the view expressed thereon.
18. I have considered the submissions and have perused the records. To the extent the issue relates to the claim of the assessee to deduction of the element of duty in the price had not been considered by the authorities below (which fact has not been disputed), I am in agreement with the view taken by Member (Judicial) that the said aspect requires to be gone into by the original adjudicating authority. I also observe that there is no reference to any case law relating to interpretation of Section 4(4)(d)(i) in the order recorded by the ld. Vice President.
19. After considering the submissions made and after perusal of the record, I agree with the view taken by Member (Judicial) that the said aspect requires to be gone into in remand.
20. The difference of opinion matter is disposed of in the above terms.
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(A.C.C. Unni)
Member (J)
21. The appeal is thus allowed by way of remand.
