[Order per : I.J. Rao, Member (T)]. - The background and facts of the present appeal were well summed up by the Assistant Collector. We set out these facts as summed up by him so that what follows will be clear :

“Brief facts of the case :

M/s Indian Explosives Ltd. (Former - Alkali & Chemical Corporation of India Ltd.) herein referred to as company, is engaged in the manufacture of paints falling under T.I. 14 (Paint is only taken here being the subject matter of dispute) in addition to other products and subject-wise orders in the disputed P.M.E./P.M.P. matters will be issued separately. The dispute in the instant case, regarding abatement of post manufacturing expenses from the price lists filed by the Company had arisen out against the show cause notice of the Additional Secretary to the Government of India, Ministry of Finance, Department of Revenue, New Delhi bearing F.No. 198/B/7/45/81-CX.V, dated 24-8-1981 and the Order of the Assistant Collector, Central Excise, Calcutta-IV Division, Calcutta, dated 10-10-80 issued under C. No. V(14) 17-15/78/9471, dated 13-10-80. The Assistant Collector, Central Excise, Calcutta-IV Division, Calcutta, in his aforesaid order dated 10-10-80 rejected the post manufacturing expenses, in other words the amount of post manufacturing expenses should be loaded with the assessable value for the purpose of assessment. The Assistant Collector, Central Excise, Calcutta-IV Division, however, allowed the cash discount to be abated from the value of the goods before arriving at the assessable value since the cash discount was ascertainable in their price lists.

Being aggrieved with the order of the Assistant Collector, Central Excise, Calcutta-IV Division, Calcutta, preferred an appeal before the Appellate Collector, Central Excise, Calcutta and the Appellate Collector, Central Excise, Calcutta, set aside the order of the Assistant Collector, Central Excise, Calcutta-IV Division, vide his Order-in-Appeal No. 4/WB of 1981 dated 17-1-81.

Against the aforesaid order of the Appellate Collector of Central Excise, Calcutta, the department preferred review of the above order before the revision authority vide letter C. No. V-14(2)7-CE/WB/Review/81/3881A dated 20-4-81. The Revision authority in its show cause notice dated 24-8-81 proposed to restore the order of the Assistant Collector of Central Excise, Calcutta-IV Division, Calcutta.

The Company did not response to that Show Cause Notice of the revisionary authority and instead of availing the remedial course as prescribed in the Central Excises and Salt Act, 1944, has taken up entire issue before the Hon’ble Calcutta High Court, by preferring a Writ petition bearing C.R. No. 1024(W) of 1981, dated May, 1981, against the approval order No. PV-20A/Part-11/ACCI-I-PLV/81/799, dated 7-5-81 of the Assistant Collector, Central Excise, Calcutta-IV Division.

The Hon’ble Calcutta High Court in its’ order on C.R. No. 1024 of 1981, dated 23-6-81 ordered that pending the disposal of this application the respondents above named are restrained from enforcing demands which are impugned in the present case as also from taking any action on the basis of the said notice and it is further ordered that the respondents do make provisional assessments on the basis of the valuation as shown by the petitioner subject to the said petitioners’ furnishing the bond as required by Rule 9B of the Central Excise Rules, 1944. The said company has since been availing of the provisional assessment in terms of the aforesaid order of the Hon’ble Calcutta High Court.”

The Hon’ble Calcutta High Court in its order dated 7-12-83 disposed of the above case in accordance with decision of the Supreme Court of India in the case of Union of India v. M/s. Bombay Tyres International Ltd. reported in 1983 E.L.T. 869 and such other decision or orders that may be given or made by the Supreme Court on the subject.

The Hon’ble Calcutta High Court in the said order dated 7-12-83 has passed the following orders: ‘

(a) The impugned order of the Assistant Collector, dated 7-5-81 is set aside.

(b) The appropriate Excise authority will approve all the price lists and the RT 12 returns which form the subject matter of the writ petition in accordance with decision of the Supreme Court in the case of Union of India v. M/s. Bombay Tyre International Ltd. reported in 1983 ELR 869 and such other decisions or orders that may be given or made by the Supreme Court on the subject.

(c) The approvals and assessments as aforesaid will be made after giving the writ petitioners hearing and upon notice to them of at least five weeks.

(d) The writ petitioners will be entitled to take such other proceedings or action as they may be advised if they feel aggrieved by the orders of assessments.

(e) Until the final disposal of assessment proceedings the Excise authorities are directed not to make any demands in respect of past periods, except the duly admitted to be due by the petitioners, if the same have not been paid.

(f) In respect of future periods, Excise authorities will be entitled to assess and levy duty in accordance with aforementioned decision of the Supreme Court and to realise the same in accordance with Law. The petitioner may take appropriate action if they are aggrieved by such assessment.

(g) All interim orders are vacated.

The Assistant Collector subsequently issued a show cause notice on 22-6-1984 calling upon the assessee to come up with necessary evidence to support their claims. There was some correspondence and ultimately the appellants were heard in February and March 1985. The Assistant Collector then passed an order on each item of reduction claimed by the appellants and rejected all of them, and ordered that the differential duty should be paid.

2. The appellants filed an appeal before the Collector of Central Excise (Appeals). He remanded the matter to the Assistant Collector recording as follows :

“The assessee in their letter dated 23-7-84 submitted year-wise break up abetment of deduction on different heads like Freight and Transportation, Rates and Taxes and discounts and rebates. As per decision of the Supreme Court the claims for abetment were though permissible against such heads but the way by which the claim per unit was arrived at was not accepted by the Assistant Collector in allowing the same. It was calculated on average basis taking into consideration for sales of all the products excisable, non-excisable and the products of both the factories of Rishra and Hyderabad. Moreover, the period for taking into such account did not cover the entire period of clearances for making such average calculation. As such the Assistant Collector of Central Excise, did not accept their claim for abetment and passed order demanding duty against which the instant appeal is made.

The appellants contended inter alia that all their claims for abetment from price were in accordance with the judgment of Supreme Court. The average freight, as calculated over both excisable and non-excisable goods taking into account both the weight total expenditures, would not make in principle any difference for the purpose of arriving at a correct figure of the average freight per unit of paints and varnishes too. Further, they contended that the coverage unit deductions claimed in respect of various taxes and discounts allowed on different headings calculated on the basis of the same principle had also been disallowed by the Assistant Collector in his Order (O) stating that such rate of taxes are different at the different States and the products of both the factories have been together for computation in determination of such average unit. In the decision of the case Supreme Court specifically clarified that in the case of companies having two factories at different area producing the same products that can be clubbed together in determination of the abetments. The Assistant Collector unreasonably turned down all such claims for abetment and demanded duty against which the instant appeal is filed. They also desired to be heard before decision of the case while further clarification will be made by them.

Accordingly a date of personal hearing was fixed for their stay petition on 18-5-85 while the representative appeared and submitted that the payment by instalment was approved by Board. In view of the same the pre-deposit was waived subject to the condition that no adjournment sought for hearing fixed as on 1-6-85 for the appeal.

The heads under which the abetment claimed by the appellants though appear to be admissible as per judgment of Supreme Court in the case of Union of India v. M/s. Bombay Tyres International Ltd. but the main dispute for (SC) calculation in arriving to the claims for such abetment. The appellants submitted the claim after arriving to a figure on average per unit sales taking into account the total quantity of their products with the total expenditures under head for all their excisable, non-excisable goods and also the raw materials in the case of freights for such abetment. The abetments which is claimed against the price of one commodity should be calculated at least for arriving to an average unit of sale determined against such product. In the case of different factories manufacturing the same product that can also be taken into account for the calculation in arriving to such average unit of sales. Hence the contention of Assistant Collector, in accepting such an average unit figure for abetment without any proper basis of calculation, can also not be ignored. It is evident that the quantum on an average unit since arrived at as per calculation taking into account of all the products will definitely vary with the averages that will be determined and calculated simply on the said product only. The claim for abetment from price as in average should be calculated on the basis of the same commodity and not ascertained that in general way. The appellants’ further contention that the quantum of deductions claimed per unit of sale as per similar calculation certified by the Chartered Accountant have been accepted by the Assistant Collector of Central Excise, Hyderabad for their factory there and that has not been allowed here. This cannot be an established principle for any logic or support for acceptance of the same at this place too.

It is a fact that the assessee is entitled for certain abetment which should be calculated and claimed on the basis of the procedures as discussed above and the Assistant Collector should have given the assessee some more scope to submit the claims properly before disallowing the full claims in his order(s) which has been too much harsh and irregular on the instant case.

In view of the discussions as made above the case is remanded for de novo adjudication giving the assessee a further chance for claiming the abetments after submission of particulars as discussed above within two months of receipt of the order."

3. This order is not very clear but it appears that the Collector (Appeals) ordered the working out of the freight and other deductions, claimed by the appellants, product-wise and sale-unit-wise. Against this order the present appeal is filed. Shri Bhaskar Gupta, the learned Senior Advocate on being questioned by the Bench stated that no orders have been passed by the Assistant Collector in pursuance of Collector (Appeal)’s orders.

4. The issue before us, therefore, is how to give effect to the orders of the High Court in regard to the deductions claimed by the appellants.

5. These deductions have been ordered to be examined with reference to the Supreme Court’s judgment in Union of India v. Bombay Tyre International Ltd. - (SC). The appellants have two factories one at Rishra, in West Bengal and another at Hyderabad. Both the units manufacture paints and varnishes and other chemical products classifiable under different tariff items. The appellants charged a uniform price for their particular product throughout the country and even at their factory gate.

6. We heard Shri Bhaskar Gupta, Senior Advocate for the appellants explained the facts and submitted that the deductions claimed by the appellants are under 3 heads, namely (1) freight and transport charges, (2) rates and taxes:(a) turnover tax, (b) surcharge on sales tax, (c) purchase tax, (d) octroi duty; (3) Discounts and rebates consisting of (a) cash discounts, (b) prompt payment discount (c) turnover rebate (d) commission to stockists (e) no claim discounts (f) special discounts. Referring to freight the learned Advocate stated that the goods of the company are despatched to numerous points in the country in trucks carrying goods including some exempted and non-excisable goods. He submitted that the Assistant Collector ordered that separate figures should be worked out in respect of each of the deductions claimed, in respect of each factory and in respect of each commodity. This would be impossible as the trucks carried different commodities as stated by him. He further submitted that the appellants took into consideration the total freight, averaged the same and allocated it to dutiable goods so that the freight incurred on exempted and non-excisable goods does not enter the figures of deductions towards freight claimed by the appellants. He further submitted that the Assistant Collector did not accept the allocation on average basis.

7. Referring to the impugned order-in-appeal the learned Advocate submitted that it was wrong on the part of the Appellate Collector to state that there was carriage of raw materials. Such raw materials formed a miniscule part of the cargo. He further submitted that the Collector of Central Excise (Appeals) did not take into consideration the various pleas, but made some general observations and remanded the matter to the Assistant Collector.

8. The learned Advocate explained how in the light of Supreme Court judgment in Bombay Tyre International (supra) the deductions claimed by the appellants were admissible. He pleaded for an order on the method to be adopted for granting deductions to the appellants.

9. The learned DR, Shri Kumar in reply submitted that insofar as freight and transit insurance charges are concerned, he would have no objection to working out deductions on an average basis if the goods are carried at a uniform price (per unit of rate) and if the transporter does not distinguish between goods. The learned Advocate intervening stated that regardless of the nature of the goods there is a fixed rate of freight charged by the transporter. The learned SDR further submitted that the appellants can give separate figures in respect of paints, organic surface active agents, polishes and creams, thinners, and pre-treatment chemicals, polythene and rubber chemicals, the 6 categories of goods manufactured by the appellants. In respect of taxes admissible for deduction, the learned representative stated that the averaging may not be acceptable as some goods are cheap and some are costly and there are lower and higher rates of taxes on various goods. Therefore, a simple average would not be correct. He, however, submitted that if average is worked out on each separate tariff item, a workable solution may be found. In respect of discounts, Shri Kumar submitted that such discounts have to be claimed in the price list and for this purpose the matter may, if considered necessary, be remanded to the Assistant Collector.

10. We have considered the arguments of both sides. In principle there can be no doubt - and both the lower authorities have agreed that in the light of the Supreme Court judgment in Bombay Tyre International the appellants are entitled to deductions mentioned therein and by the Calcutta High Court. The Assistant Collector wanted the factory-wise and commodity wise figures and did not accept the average figures worked - out by the appellants. The Collector (Appeals) appeared to have ordered the acceptance of average figures on the basis of separate commodities.

11. We have given careful thought to the facts of the case. Insofar as the principles are concerned, there is no doubt about them because the Supreme Court in their judgment have laid down such principles. The question in this matter is only how to work out the deductions in view of the complications. These complications are that the appellants have two factories, they produce several commodities and these commodities are carried in trucks to many points for sale in the country. Further, the trucks carry not only excisable goods which fall under different tariff items and are subject to different rates of duty but also exempted and non-excisable goods manufactured by the appellants. It appears that a very small quantity of raw materials is also carried.

12. These circumstances cannot, however, lead to a denial of deductions to the appellants when such deductions are permitted by law and have been interpreted by the Supreme Court, and the Calcutta High Court has ordered their grant to the appellants. The Central Excise authorities do not deny the principles. We, therefore, have to find out a method by which deductions are allowed to the appellants in such a way that maximum possible justice is done to both sides. There can be no mathematical accuracy in fixing the method because of the factual background which we had set out above. The appellants manufacture 6 categories of products. They manufacture all product groups at Rishra factory and they manufacture only paints and allied products in Bala Nagar Factory. The learned Advocate for the appellants confirmed that it would be possible for them to allocate separate figures of freight and taxes actually paid on each of the 6 categories. In respect of taxes, we note the arguments of the learned SDR but in view of the factual background there cannot be a calculation of taxes in the case of each commodity. Taxes too have to be worked out on the basis of the 6 categories. Insofar as deductions on account of discount/rebate are concerned we accept the argument of the learned SDR. These deductions have to be claimed in the price list and there can be no question of averaging them. The appellants stated that after the Supreme Court judgment in Bombay Tyres International case they filed revised price lists in which they claimed deduction of the discounts. They prayed that the question of admissibility of these deductions as well as the time bar aspect may be left open for a decision by the Assistant Collector.

13. In the light of the discussions we order that:

(i) deductions on account of freight and transit insurance should be allowed pro-rata on average basis after verifying the claims of the appellants made on the basis of 6 categories of products; for this purpose, the total cost of transportation of the two factories for a year or a quarter, as convenient could be taken together, the pro-rata cost for exempted, non-excisable and specific rated products transported deducted therefrom and the balance amount allocated to individual ad valorem rated products on weight basis, sale-unit basis.

(ii) deductions on account of taxes should also be allowed on a similar average basis if allocation on actual basis is either impractical or too cumbersome;

(iii) the matter of discount/rebates, including time-bar aspect should be decided afresh by the Assistant Collector in the light of Supreme Court judgments in Bombay Tyres International case aforesaid and in MRF Ltd. case [ SC].

14. The appeal is allowed, in these terms, by remand.