ORDER
K. Sreedharan, J. (President)
1. Appellants, M/s. Geep Industrial Syndicate Limited, are engaged in the manufacture of batteries, torches and bulbs. They sell their products at the factory gate and from their depots located all over the country. Sale at the factory gate is about 3% of the entire produce. Remaining bulk quantity is sold from various depots. Department took the view that the appellants were selling the goods at a higher price at the depot and were realising 7% to 18% more than the price fixed at the factory gate sales. Thereby, show cause notices were issued for re-fixing the normal value of the goods sold. This attempt of the department was opposed by the appellants. According to them, the excise duty should be leviable on the basis of the ex-factory price and that they are entitled to have expenses incurred for maintaining the depot deducted from the sale price for arriving at the assessable value. Adjudicating authority rejected these contentions and confirmed the demand. Appeal filed against the order of adjudication was dismissed. The matter came up before this Tribunal. By final order No. 1063 to 1066/95-A, dated 20-12-1995, this Tribunal remitted the matter to the jurisdictional Assistant Collector for re-determination of the assessable value on the basis of observations made therein. Manufacturer took up the matter to the Supreme Court in civil appeal Nos. 10876-79 of 1996. Those appeals were heard by their Lordships alongwith civil appeal Nos. 10392-93 of 1996. By order dated 3-11-1999, their Lordships allowed the appeal and restored the appeals before this Tribunal to be heard and disposed of afresh. Accordingly, these appeals have been restored.
2. Heard learned counsel representing the appellants and learned Departmental Representative and perused the records. We are disposing of the appeals herein below.
3. Nearly 3% of the produce manufactured by the appellants are sold to dealers at the factory gate. Remaining bulk are sold through various depots located in various parts of the country. Price at which the goods were sold to the dealers from the depot was higher than the price fetched at the factory gate. When the department worked out the factory gate price from the depot price by giving permissible deduction, that price was found to be higher than the price at the factory gate. Therefore, adjudicating authority adopted the method of adding the said difference to the ex-factory price for fixing the assessable value. This is clear from the following observation made by the Assistant Collector in page 9 of his order which reads “the distribution expenses and interest on inventory of finished goods at branches/depots should in fact be the part of the value at the factory gate, since these elements cannot be deducted under the provisions of section 4 ibid. Since the distribution expenses and interest on inventory of finished goods at branches/depots are initially borne out by the party and ultimately flows back from the buyers to the company against the sale of their goods, the same enriches the value of the products by not adding these elements at factory gate, party has deliberately lowered down their prices at factory gate, since they are having a very little sale i.e. less than 3% at factory gate”. When goods are sold by a manufacturer from depots, for finding out its value at the time and place of removal namely, the factory gate, department has to work back. While working back to find out the assessable value, permissible deductions are to be given to their depot price. In the instant case, while resorting to that course, authorities came to the conclusion that the price so arrived at was above their ex-factory price. Therefore, departmental authorities have taken a curious method of adding that difference to the ex-factory price for finding out the assessable value. No provision of law has been brought to our notice by the learned DR which supports such a course of action. Therefore, we are clear in our mind that the method adopted by the department is clearly erroneous.
4. Admittedly, nearly 3% of the products manufactured by the appellants are sold at factory gate. Nowhere in the orders passed by the authorities below have they got a case that that price was not genuine. No circumstance has been brought out by the department to doubt the genuine nature of the ex-factory sales. In such a situation, learned counsel representing the appellants submitted that Excise authorities are not to follow the goods to the depot. They are to assess the goods on the basis of their normal price at which the goods are sold at the factory gate. Learned counsel argues that the quantum or percentage of the produce sold at the factory gate is irrelevant. If the ex-factory sales are genuine, the price fetched at the sale should be taken as the normal price for finding out the assessable value. Reference was made to the decisions in A.K. Roy and Anr. v. Voltas Limited reported in 1977 E.L.T. (J 177), Indian Aluminium Cables Ltd. v. CCE reported in 1989 (40) E.L.T. 86 (Tribunal) and Century Laminating Co. Ltd. v. CCE, Meerut reported in 1999 (114) E.L.T. 410 (Tribunal). Relying on the Supreme Court’s decision in A.K. Roy and Anr. v. Voltas Ltd., a Larger Bench of 3-Members of this Tribunal in Indian Aluminium Cables Ltd. observed “the determination of the wholesale cash price may not depend upon the number of wholesale dealings. The quantum of goods sold by a manufacturer on wholesale basis is entirely irrelevant. The fact that such sales may be few or scanty does not alter the true position”. In the instant case, 3% of the produce are sold to dealers at the factory gate. That price, as stated earlier, has not been shown to be rigged or influenced by extra commercial considerations. When that price is shown to be the normal price, assessment to duty must be based on that price. The other exercise undertaken by the department is not warranted by the provisions of law.
5. In view of what has been stated above, we allow these appeals. The demands made under the impugned orders are quashed.
