1996 (1) TMI 262 - AT - Central Excise

'Dharmada' not part of assessable value for duty calculation, upholding Tribunal's consistent application.

The court held that the 'Dharmada' amount collected along with the price of excisable goods is not liable to be included in the assessable value for duty ... Inclusion of Dharmada in assessable value - assessable value of excisable goods - Dharmada not part of the price of goods - payment for charitable purposes - distinction between assessable value under excise and turnover under sales tax - reliance on Supreme Court precedent in Commissioner of Income-tax v. Bijli Cotton MillsInclusion of Dharmada in assessable value - Dharmada not part of the price of goods - distinction between assessable value under excise and turnover under sales tax - reliance on Supreme Court precedent in Commissioner of Income-tax v. Bijli Cotton Mills - Amount collected as 'Dharmada' along with the price of excisable goods is not liable to be included in the assessable value of the goods for the purpose of reckoning excise duty. - HELD THAT: - The Tribunal and the Court applied the Supreme Court's reasoning in Commissioner of Income-tax v. Bijli Cotton Mills that sums collected as 'Dharmada' are payments for a specific charitable purpose and are not part of the price or a surcharge on the price of goods. Decisions of High Courts treating similar realisations as part of taxable turnover under sales tax statutes were held distinguishable because they turned on statutory definitions of 'turnover' in those enactments. Having regard to the binding view that 'Dharmada' is not part of the price, the Collector (Appeals) was right to set aside the demand upheld by the Assistant Collector, and there was no ground to interfere with the Tribunal's established approach.Appeals dismissed; 'Dharmada' excluded from assessable value for excise duty.Final Conclusion: The Tribunal's consistent application of the Supreme Court's decision in Bijli Cotton Mills leads to dismissal of the Department's appeals: amounts collected as 'Dharmada' are not part of the price and need not be included in the assessable value of excisable goods. Issues:1. Whether the amount collected as 'Dharmada' along with the price of excisable goods is liable to be included in the assessable value for duty calculation.2. Interpretation of 'Dharmada' in relation to taxable turnover under sales tax legislation.3. Application of Supreme Court's decision in Bijli Cotton Mills case regarding 'Dharmada' amount.4. Consistency of Tribunal's view with Supreme Court's interpretation.Issue 1:The primary issue in the judgment revolves around determining whether the amount collected as 'Dharmada' along with the price of excisable goods should be included in the assessable value for duty calculation. The respondent had not included the 'Dharmada' amount in the price list submitted for duty calculation, leading to a demand for duty on this amount by the Assistant Collector. The Collector (Appeals) initially set aside the demand based on a Supreme Court decision, but the Department challenged this decision.Issue 2:The judgment delves into the interpretation of 'Dharmada' in the context of taxable turnover under sales tax legislation. Reference is made to a case involving 'Mahimai' collected by an assessee from customers, where the High Court of Madras held that such amounts form part of the turnover. The Supreme Court in the Bijli Cotton Mills case differentiated between the price of goods and 'Dharmada,' emphasizing that the latter is a payment for charitable purposes and not part of the price or a surcharge on the price.Issue 3:The application of the Supreme Court's decision in the Bijli Cotton Mills case regarding the 'Dharmada' amount is crucial in this judgment. The Court clarified that 'Dharmada' is not a part of the price but a payment for specific charitable purposes. It distinguished previous decisions under sales tax legislation where the question was whether such amounts fell within the definition of 'turnover,' emphasizing that 'Dharmada' is not a surcharge on the price but a separate payment for charitable purposes.Issue 4:The Tribunal's consistency in following the Supreme Court's interpretation of 'Dharmada' is highlighted in the judgment. The Tribunal had been applying the view that 'Dharmada' is not part of the price or surcharge since 1987, as seen in the case of Mohan & Company. Given the Supreme Court's clear stance on the nature of 'Dharmada' as a payment for charitable purposes, the Tribunal found no grounds to interfere with the Collector (Appeals) decision and dismissed the appeals.In conclusion, the judgment clarifies the treatment of 'Dharmada' amounts in the context of duty calculation and taxable turnover, aligning with the Supreme Court's interpretation that such amounts are separate payments for charitable purposes and not part of the price of goods.