1990 (9) TMI 170 - AT - Central Excise

Tribunal Rules in Favor of Appellants for Concessional Assessment /79-CE

PP. PATEL AND CO. Versus COLLECTOR OF C. EX.

PP. PATEL AND CO. Versus COLLECTOR OF C. EX. - 1991 (52) E.L.T. 261 (Tribunal) Issues:Eligibility for concessional assessment under Notification 35/79-CE.Analysis:The appeal in this case revolves around the eligibility of the appellants for the benefit of concessional assessment under Notification 35/79-CE. The appellants, who manufacture branded chewing tobacco, claimed the benefit of concessional assessment at the rate of 15% under the said notification, arguing that the value of the branded chewing tobacco did not exceed Rs. 10 per kg. The dispute arose regarding the inclusion of post-manufacturing expenses in the assessable value and whether the net weight or gross weight of the tobacco should be considered for determining the rate of duty under the notification.The initial proceedings involved a show cause notice issued by the Superintendent, which culminated in an order by the Assistant Collector confirming a demand for a specific period. The Assistant Collector held that post-manufacturing expenses were to be included in the assessable value, leading to a higher rate of duty. The issue of net or gross weight was also addressed, with the Assistant Collector emphasizing the inclusion of post-manufacturing charges in the assessable value.Subsequent appeals and review notices further delved into the inclusion of post-manufacturing expenses in the assessable value. The Appellate Collector opined that post-manufacturing charges should not be included when optional, and the Government of India later held that such expenses were includible. The appellants challenged this decision before the Bombay High Court, which dismissed the appeal.The final determination in this case was influenced by a previous decision of the Tribunal in a similar case, where it was held that the value of primary packing should be included in determining the value of the tobacco for notification purposes. The Tribunal clarified that the value should reflect the tobacco's value when it reaches the ultimate consumer, after deducting the value of packaging materials. Based on this interpretation, the appellants were found eligible for the concessional rate of duty as the value of chewing tobacco per kg was less than Rs. 10.Regarding the argument of res judicata raised by the learned SDR, the Tribunal found that the issue of gross or net weight was not raised or decided in the previous judgment of the Bombay High Court. The High Court's decision focused on the inclusion of post-manufacturing expenses in the assessable value, and the weight issue was not part of the dispute. Therefore, the Tribunal held that the High Court judgment did not operate as res judicata against the appellants.In conclusion, the Tribunal set aside the impugned order and allowed the appeal, ruling in favor of the appellants based on the settled interpretation of the notification and the absence of a conclusive decision on the weight issue by the Bombay High Court.