Appellant's Differential Duty Confirmed with Freight Deduction Plea Accepted, Assessable Value Issue Deemed Not Rectifiable

COROMANDAL FERTILIZERS LTD. Versus COLLECTOR OF CENTRAL EXCISE, MADRAS

COROMANDAL FERTILIZERS LTD. Versus COLLECTOR OF CENTRAL EXCISE, MADRAS - 1987 (32) E.L.T. 426 (Tribunal) Issues Involved:
1. Determination of assessable value under Section 4 of the Central Excise Act.
2. Inclusion of agent's commission in the assessable value.
3. Validity of differential duty demand.
4. Applicability of Supreme Court judgments in rectification of mistakes.

Issue-wise Detailed Analysis:

1. Determination of Assessable Value under Section 4 of the Central Excise Act:
The appellant filed two price-lists for their products, disclosing an identical price of Rs. 2,930/- per M.T., inclusive of Central Excise Duty and agent's commission. The assessable value was determined at Rs. 2,547.83 per M.T. after excluding the Central Excise Duty. The department issued a notice alleging the normal price should have been Rs. 3,000/- per M.T., leading to a contravention of Rule 173C(i) of the Central Excise Rules, 1944. The adjudication held the appellant liable for a differential duty amounting to Rs. 2,41,293.03, which was confirmed on appeal. The Tribunal, referencing the Supreme Court's judgment in the case of Bombay Tyre International Ltd., accepted the plea for deduction of equalised freight included in the price of Rs. 3,000/- per M.T., subject to verification by lower authorities.

2. Inclusion of Agent's Commission in the Assessable Value:
The original determination of assessable value excluded the agent's commission. The instant revision application did not relate to the inclusion of the agency commission in the assessable value or the assessable value for NPK 14-35-14. The Tribunal did not address this issue further in the rectification application.

3. Validity of Differential Duty Demand:
The appellant was initially found liable for a differential duty of Rs. 2,41,293.03. The Tribunal, in its order dated 13-8-1986, held that the ex-factory price should be taken for assessment if sales occur uniformly at that price, and transportation costs should be excluded if the price at a place other than the place of removal is considered. The appellant argued that the factory gate price of Rs. 2,930/- per M.T. should be accepted regardless of the sales volume, citing the Supreme Court's ruling in A.K. Roy v. Voltas Ltd. The Tribunal, however, deemed the point debatable and not suitable for rectification under Section 35C of the Central Excises and Salt Act, 1944.

4. Applicability of Supreme Court Judgments in Rectification of Mistakes:
The appellant's advocate argued that the Tribunal should have applied the Supreme Court's rulings in A.K. Roy v. Voltas Ltd. and Bombay Tyre International Ltd., which assert that the quantum of goods sold on a wholesale basis is irrelevant for determining the assessable value. The learned SDR countered that these judgments had already been considered and that the proper recourse was an appeal to the Supreme Court, not a rectification application. The Tribunal noted that rectification under Section 35C pertains to obvious and patent mistakes, not debatable points of law. It referenced the Supreme Court's observation in T.S. Balaram v. Volkart Bros. that a mistake apparent on the record must be obvious and not established through a long reasoning process. The Tribunal concluded that the issue of stray sales for determining the wholesale price was debatable and not suitable for rectification, thereby dismissing the ROM application.