Bio Foods (P) Ltd. v. Commissioner Of Central Excise, Meerut

[Order per : C.N.B. Nair, Member (T)]. - The issue involved in both these appeals is whether the extra realisation on account of amounts collected towards special packing and transportation cost are liable to duty. The duty has been demanded in the impugned orders in respect of the amounts collected under both the heads in excess of the actual expenditure incurred by the appellants.

2. Arguing the appeal ld. Counsel Shri S.V. Arya submits that the assessments had been carried out based on ex-factory prices under Part I and Part II. In such a situation a reopening of the assessment to enquire into the realisation under freight and special packing is not permissible. He referred us to the decision of the Supreme Court in the case of Baroda Electric Meters Ltd. v. CCE [ (S.C.)] wherein the Apex Court held that differential amount on account of equalised freight charges from everyone and freight actually paid is not includible in the assessable value since the duty of excise is on manufacture and not on profit made by a dealer on transportation. He also referred us to the decision of the Supreme Court in the case of Indian Oxygen Ltd. v. CCE [] wherein the Apex Court held that where goods are partly sold from depots and partly from factory and ex-factory prices are ascertainable ex-factory price is to be the basis of value under Section 4 of the Central Excise & Salt Act even for goods sold from depot. Shri Arya, ld. Counsel also relied on the judgments of the CEGAT in the case of Farm Fresh Foods (P) Ltd. v. CCE, Chandigarh [ (Tri.) = 1998 (29) RLT. 418], Gomti Engg. Works v. CCE, Allahabad 1998 (27) RLT. 849 and G. Claridge & Co. Ltd. v. CCE, Chandigarh [].

3. Countering the arguments on behalf of the appellants, ld. SDR Shri K. Srivastava submitted that the judgments relied upon by the appellants are distinguishable from the present appeals inasmuch as the allegation in these cases is that the appellants had shown part of the value of the goods as the cost of transportation and special packing, thus suppressing the actual value of the goods. He also submits that no specific submission had made by the appellants before the adjudicating authority that ex-factory price was available. He also submitted that as the appellants had not made a submission before the adjudicating authority that the differential amount representing the collection on account of freight and special packing and the actual cost incurred under these heads are not to be included in the assessable value; that view remains not considered by the adjudicating authority and therefore, the case is required to be remanded for a decision on this point. He also submitted that it would appear from para 3 of the adjudication order No. 41/94, dt. 22-3-94 that even in respect of ex-factory sales, the appellants were collecting excess amounts under the two headings.

4. We have perused the records of the case and have considered the rival submissions. It is settled law in view of the decisions of the Apex Court in the case of Baroda Electric Meters Ltd. and Indian Oxygen case that if ex-factory price is available, all assessments have to be carried out according to that price. It is also settled law that the differential amount between the amounts collected towards freight and insurance and the cost actually incurred on freight and insurance are not be included in the assessable value. In the instant case also, the issue involved is the same, irrespective of whether the appellants had collected these amounts in all cases or not. We find that the SCN and the orders mentioned that the appellants had a part I price and Part II price in respect of their clearances. The appellants’ contention that they sell the goods both at the factory gate and from depots also remains unchallenged in the records of the case. In the circumstances, we hold that the impugned orders demanding duty on the differential amount between the amounts realised under these two headings and amounts actually spent is incorrect. The appeals are, accordingly allowed and impugned orders are set aside with consequential relief to the appellants.