1988 (7) TMI 58 - SC - Central Excise

Delivery, collection charges and cylinder deposits excluded from assessable value; loading inside factory included; base value on ex-factory price

SC held that delivery and collection charges, cylinder deposits and rentals are not part of the assessable value as they do not pertain to manufacture and ... Assessable value - Inclusion of additional charges in the assessable value​​​​​​​ - appellant claimed abatements on account of freight and handling charges in respect of which they did not produce any evidence​​​​​​​ - Whether Delivery and collection charges (where applicable), Cylinder deposit and Rentals being additional charges, should form part of the assessable value? Held that:- In this case the price of the goods at the factory gate Visakhapatnam is known. It is clear from Section 4 that the delivery and collection charges have nothing to do with the manufacture as they are for delivery of the filled cylinders and collection of the empty cylinders. These charges have to be excluded from the assessable-value. Insofar as the loading charges Incurred for loading the goods within the factory are concerned, they are to be included in the assessable-value, irrespective of who has paid for the same but the loading expenses incurred outside the factory gate are excludible. Duty is excise to a tax on the manufacture, not a tax on the profits made by a dealer on transportation. In view of the conduct of the dealer, there was doubt as to what was the real ex-factory price. If there was a finding that there was no real ex-factory price, then the aforesaid observations would have required serious examination. But in this case, the case has not proceeded on that basis. On the contrary, there is a clear finding that there was an ex-factory price which is ascertainable. If once that is the position that should be the basis upon which the value is to be determined, the other expenses, costs or charges must be excluded. Inasmuch as that is the correct position in law, we direct that the Assistant Collector will re-fix the assessable value as indicated in this judgement. The Tribunal's judgement is modified accordingly. These appeals are disposed of. Issues:- Assessment of assessable value under the Central Excises and Salt Act, 1944.- Inclusion of additional charges in the assessable value.- Determination of value under Section 4 of the Act.- Application of principles from previous judgments in determining assessable value.Analysis:The judgment by the Supreme Court of India, delivered by Sabyasachi Mukharji J., pertains to appeals under Section 35L(b) of the Central Excises and Salt Act, 1944. The appellant, a manufacturer of compressed Oxygen and dissolved acetylene, received show-cause notices regarding the approval of price lists for their products. The Tribunal found discrepancies in the prices charged by the appellant at their depots and service centers compared to the approved price list, leading to a dispute with the revenue department regarding the inclusion of additional charges like delivery and collection charges, cylinder deposit, and rentals in the assessable value.The department contended that these additional charges should form part of the assessable value. The Tribunal observed that the assessable value should be based on the price at the factory gate, and any transportation charges incurred should not be added to the wholesale price at the factory gate for excise duty purposes. The Tribunal directed the Assistant Collector to re-fix the assessable value based on the principles outlined in the judgment.The judgment emphasized the importance of determining the assessable value in accordance with Section 4 of the Act. It reiterated that the value of excisable goods should be based on the normal price at which the goods are ordinarily sold in wholesale trade for delivery at the time and place of removal. The judgment referenced previous cases to support the principle that once the ex-factory price is ascertainable, other expenses or charges must be excluded from the assessable value.The counsel for the respondent highlighted specific observations from previous judgments regarding the inclusion of various expenses in the value of excisable goods. However, the Court clarified that in the present case, there was a clear finding of an ascertainable ex-factory price, which should be the basis for determining the assessable value. Accordingly, the Court directed the Assistant Collector to re-fix the assessable value in line with the judgment, modifying the Tribunal's decision. The appeals were disposed of with no order as to costs.