By TIOL News Service

AHMEDABAD, FEB 22, 2016: THE Assessee was selling excisable goods through their depots situated at various places of the country and were filing the Declaration in Proforma-II declaring therein the price at which the excisable goods were sold from the depots at the time of removal of the goods from the factory.

During investigation, the officers noticed that there was variation in prices at factory gate and subsequent sales from the depots.

SCN demanding differential CE duty of Rs.70,45,270/- for the period from September 1995 to March 1999 came to be issued alleging that appellant had not determined the correct AV of their product by claiming excess deduction of freight and forwarding i.e. transportation charges and also failed to determine and discharge the correct Central Excise duty leviable on their product considering the value/prices collected from their depots.

The CCE, Vapi confirmed the demand of Rs.51,61,530/- alongwith interest& equal penalty after allowing the benefit of "cum-duty price". He also dropped the demand of duty of Rs.9,34,690/- involved on excess transportation charges. Personal Penalties were also imposed on company officials.

The assessee is before the CESTAT and so is Revenue.

The appellant assessee inter alia submitted that as per Section 4 of the CEA, 1944 they were liable to pay duty at the factory gate on the price prevailing at depot and that subsequent revision of price at depot has no effect; that varying rate of prompt payment discount was offered& is allowable as deduction; that cash discount is also admissible deduction; that it is settled law that benefit of cum-duty price is allowed and the demand of duty on excess transportation charges is correctly dropped based on the decision of Supreme Court.

The AR reiterated the findings of the original authority and the ground of appeal.

The Bench after extracting the relevant portion of Section 4 prior to and after 28.9.1996 inter alia observed -

Merits:

++ Where there is no ex-factory sale and the entire stock is transferred to depots even prior to 28.09.1996, the assessable value would be determined on the basis of depot sales price, at the time of clearance of goods at factory. In the present case, as there is no ex-factory sale, the appellant is required to pay duty on the basis of the depot price prevalent, at the time of removal of the goods from the factory. So, the amendment of Section 4 as on 28.9.1996 has no effect in the present case.

++ Thus, in the case where the goods are cleared from the depot, and there is no ex-factory price available, the assessee is liable to pay duty on the price prevalent in the depot at the time of clearance of the goods from factory. It is well settled by the decisions of the Supreme Court and Tribunal that subsequent to clearance of goods, fluctuation in prices at depot could not affect liability to the excise duty. The goods are cleared on payment of duty at the price prevalent at depot at the time of clearance from the factory. After clearance of the said goods from factory, may be sold from the depot at a higher or lower price, the assessee is not entitled to claim the refund for lower price and the Dept. also cannot demand the duty of higher price at depot.

++ It is clear from the above that where no ex-factory price is available and the entire goods is sold through depots, the assessable value has to be determined on the price prevalent at the depot at the time of removal of goods from the factory before and after amendment as on 28.9.1996.

++ The finding of the Adjudicating Authority that the appellant is required to pay duty on such goods sold from the depot at a higher price over and above price as declared in their declaration, is contrary to provision of Section 4(1)(a) of the Act, 1944 and the case laws. It is not in dispute that the appellant cleared the goods from their factory, at the price prevalent at the depot and, therefore, the demand of duty cannot be raised for increase of the price after clearance of the goods from the depot. Thus, the demand of duty cannot be sustained.

Cash discounts:

+ Even if cash discount is not uniformly given or is given at the different rates to different purchasers, same would be admissible deduction. [Metal Box India Ltd Vs Collr. of C.E. Madras - 2002-TIOL-108-SC-CX, Purolator India Ltd vs. CCE, New Delhi III - 2015-TIOL-193-SC-CX refers]

Excess transportation charges:

+ The Commissioner of Central Excise has rightly dropped the demand in view of Supreme Court decision in Baroda Electric Meters Ltd - 2002-TIOL-96-SC-CX-LB, wherein it is held that the profits made by the manufacturer on transportation cannot be a part of the assessable value.

The appeal filed by the assessee and other company officials was allowed.

The Revenue appeal was rejected.

(See 2016-TIOL-484-CESTAT-AHM)