ORDER
C.N.B. Nair, Member (T)
1. A common issue arises for consideration in these appeals. Accordingly, all the appeals were clubbed together for hearing and are disposed of under this single order.
2. The appellant M/s. Hindustan Coca-Cola Beverages Pvt. Ltd. is a bottler of well-known soft drinks (Coca Cola, Limca etc.) at Varanasi. Excise duty demand under the impugned order is for the period June 1999 to May 2000. During this period, the soft drinks in question were required to be valued for the purpose of assessing them to excise duty in terms of Section 4A of the Central Excise Act. The provision of that Section is that assessable value shall be the retail sale price declared of such goods less such amount of abatement, if any, from such retail price as the Central Government may allow by notification in the Official Gazette”. At. the time of clearance of the goods covered in the present proceeding the appellant had valued the soft drinks based on declared prices and discharged duty. For example, the retail price declared on the coca-cola bottle was Rs. 9/- and duty liability was discharged by adopting this declared price less abatement notified by the Government.
3. Subsequently, show cause notices were issued alleging that “actual” retail sale price was Rs. 10/-, against Rs. 9/- declared on the bottle. It was therefore, proposed that Rs. 10/- shall be taken as the retail price and after allowing abatement, the goods re-assessed to duty and short-levy recovered. In adjudication as well as in the first appeal before the Commissioner (Appeals), demands made in the show cause notices remain confirmed.
4. The evidence relied upon in the adjudication are two fold – (i) investigation has shown that some Dhaba and hotels were actually selling the soft drinks at Rs. 10/-, there was display board at dhabas showing the sale price at Rs. 10/- and it was the evidence of the dhaba owners that, such boards were maintained by Hindustan Coca-Cola Beverages Pvt. Ltd. themselves, (ii) in addition to the price for soft drinks recovered under the invoices, the manufacturer was also collecting Rs. 15/- per crate of bottle as rental charges for the bottles. The authorities have treated that these realizations are flow-back of price of soft drinks. Duty demand is thus, based on evidence of sale at a higher price as well as flow-back of additional price to the manufacturer.
5. The appellant’s stand all though has been the same. Firstly, it is contended that the measure fixed under Section 4A is that retail sale price declared on such goods less such amount of abatement shall be the value. It is the appellant’s submission that payment of duty, in all circumstances, has to be in terms of this measure and that the actual sale price was wholly irrelevant to the assessment. Thus, it is being contended that the revenue authorities were legally in error in assuming that ‘actual’ sale price could be substituted for the declared price. The second contention is that it is a gross error, and contrary to the judicially recognized practice in the soft drink industries, to treat rental charges of crates and bottles as a flow-back.
6. In addition to the above main pillars of defence, the appellant has also sought to show that the evidence about the higher actual sale price and appellant’s involvement with it is too scanty and unreliable. The explanation for such a higher sale price has also been attempted as the result of dhabas charging higher price for cooling and serving beverages.
7. During the hearing of the case, learned Counsel for the appellant has submitted that the effect of adopting declared retail price for the Central Excise assessment now remains settled by the judgment of the Hon’ble Supreme Court in the case of ITC Ltd. v. C.C.E., New Delhi 2004 (17) E.L.T. 433 (S.C.). It is being pointed out that the Hon’ble Supreme Court has held that the declared MRP is not subject to any enquiry and that the consumer can insist on the retailer to abide by printed price and retailers violating the declaration can be punished under the provisions of Standards of Weights and Measures Act, 1976. The Hon’ble Supreme Court has concluded that no differential duty can be demanded from a manufacturer on the basis that “actual” retail price was higher than the “declared” retail price and for that reason, assessable value should be “actual” retail price.
8. Learned counsel has also referred to the decision of this Tribunal in the case of Herbertsons Limited v. C.C.E., Bombay in support of the contention that it is well settled that hire charges of bottles and crate are not to form part of the assessable value of beverages since hiring out of these items is a ancillary and allied activity, separate from the manufacture and sale of soft drinks.
9. Learned counsel has further submitted that the finding on flow-back is entirely erroneous and contrary to evidence inasmuch as, firstly rental charges of bottle are entirely for different consideration than sale of beverages and secondly, as explained through the costing data to the lower authorities, the retail price declared by the appellant-manufacturer took in all costs and profits including that of the retailer and there was sufficient margin within the declared MRP to provide for all costs and legitimate profits of every link in the distribution chain.
10. As regards the evidence about the higher price and the appellant’s involvement with the same, the explanation is that it is common that sellers charge higher price in hotels and restaurants for beverages than the printed price and that the appellant is not involved in the administering of such prices. It is also being pointed out that the position observed at a particular time in three or four dhabas or hotels cannot be made the basis for concluding that Rs. 10/- was the actual retail price for the beverage, since the appellant’s beverages were sold from about 2500 outlet and the price position in those outlets has not been considered.
11. Learned SDR would emphasis that according to law “ultimate consumer price” is to be the basis for assessment and since the appellant had only put up board showing higher price, the assessment order at the higher price is to be upheld.
12. The findings in the impugned order are not sustainable for the reasons mentioned hereunder. Section 4A provides for assessment on a fixed and invariable basis. That basis is to treat retail sale price declared on the goods less such amount of abatement as allowed by the Government as the value of the goods. “Actual” retail sale price has no place in such a scheme because actual prices are bound to be different from the prices since declared price is a maximum price and many sales may be below that price. The legal consequences that follow sales at a price higher than the declared price remains settled by the judgment of the Apex Court in the case of ITC Ltd. (supra). The view taken by the lower authorities that actual sale price can substitute for declared price for the purpose of valuation of excisable goods is clearly contrary to the rule laid down in that judgment. The factual finding about flow-back through rent for bottle is also contrary to the judicially recognized factual position. It is common practice in regard to sale of liquid and gases in durable containers that rental charges are collected for the containers separately and such rental charges do not form part of the value of the goods sold in them. This position remains recognized in the decision of this Tribunal in the case of Herbertons Limited (supra). Therefore, the finding that rental charges for the bottles was a flow-back from trade to the manufacturer is also erroneous. That apart, the appellant has shown that the declared retail price contained provision for costs and profits in the trade chain. Thus, the declared prices were fully commercial retail prices.
13. In the result, the impugned order is set aside and the appeals are allowed with consequential relief, if any, to the appellants.
(Pronounced in open Court on 24-3-2006)