TaxTMI 
TaxTMI 
1991 (2) TMI 221
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....ancial year 1982-83, and at Rs. 11,15,631.54 p during the financial year 1983-84. 2.2 During the course of verification of the appellants' sales invoices by the departmental officers, it was noticed by them that the total turnover of soda and sweetened drinks were Rs. 24,99,557.05 p during the financial year 1982-83, excluding sales tax, Central Excise duty and actual transportation cost. At this stage, it may be mentioned that what constitutes transporation cost is in dispute between the parties and will be adverted to at the later stage. During the financial year 1983-84 total value of clearances for soda and sweetened drinks was noticed at Rs. 27,44,610.60 p including everything except the sales tax. 2.3 On the basis of the aforesaid figures of clearance values, it was alleged by the department in a show cause notice, dated 16-7-1985 that the clearances of the company in the financial year 1982-83 was far above the ceiling of Rs. 15 lakhs stipulated in Notification No. 148/82-CE, dated 22-4-1982. It was also alleged that while claiming exemption under the said notification the appellants deliberately mis-declared their turnover during the year 1983-84 at Rs. 11,15,631.64 p....
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.... set out above the department's case in respect of its allegations against the appellants, the appellants, on the other hand, contend that their declarations regarding value of clearances in various financial years is correct, according to law and facts. They also assert that the issues raised in the present appeals had also been the subject matter of scrutiny by the Asstt. Collector in the show cause notice, dated 25-2-1983 issued by the Superintendent of Central Excise, Panaji. In the said show cause notice the department had examined 'the exclusion of transportation and handling charges' and it was alleged therein that as to why the said charges recovered by the appellants on a uniform basis irrespective of the destination of place of delivery as such should not be treated as equalised freight and therefore, included in the value of the goods for the purpose of assessment. This show cause notice was dropped as per the Asstt. Collector's order dated 6-8-1983 which is reproduced below :- "Sub :- Reply to Show Cause Notice dated 25-2-1983. ------ Please refer to your letter No. RD/CE/19/333 dated 19-3-1983 on the above subject. After going through the records of the cas....
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.... 23,35,073.07 (Minus) (5) Replacement of bottles and replacement/repair of crates 2,43,852.00 20,91,221.07 (Minus) 6) Delivery charges 1,41,113.52 19,50,107.55 (Minus) 7) Transportation charges payable to other agencies for transportation of 112,400 crates @ Rs. 7.40 per crate 8,31,834.00 Value of clearances Rs. 11,18,263.55 In other words, the appellants are claiming deductions from their total sales in respect of the following heads :- i) Sales tax and surcharge on Sales Tax ii) Central Excise duty iii) Maintenance, repair and depreciation of vehicles, salaries of drivers. iv) Replacement of bottles and Replacement/Repair of crates v) Delivery charges vi) Transportation charges payable to other agencies for transportation. The adjudicating authority, namely the Collector, has allowed deduction towards the first three heads mentioned above. Dispute, therefore, is in respect of the remaining three heads i.e. ....
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....able value. The appellants' learned representative, on the other hand, has urged that the cost of replacement of broken bottles and repair of crates forms a perpetual expenditure directly connected with the transportation of goods. He urges that they had claimed these deductions as transportation cost from the price list and the said price list clearly shows 'transportation, handling etc. EXTRA' in col. 13 of the price list. These deductions, therefore, could not be claimed under the heading 'packing material' simultaneously. It is also not correct, according to the learned representative that separate recovery in respect of the incidental charges towards maintenance of durable and returnable containers is made by the appellants. The department has not furnished any evidence to that effect. For the proposition that these expenses are allowed to be deducted from the overall sale price of the goods, the learned representative relies on the Tribunal's decision in the case of C.C.E. v. Century Spinning and Manufacturing Co. Ltd. [1988 (37) E.L.T. 277 (Tribunal)] which has held as follows :- "2. On careful consideration, we find no merit in the department's appeal. Once the depart....
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....ich obviously is inclusive of all expenses incurred till date of sale, in the absence of any deduction claimed by the appellants, no deduction can be allowed at this stage, according to the adjudicating authority. He further finds that there is nothing on record to show that the appellants have actually incurred any expenses under the heading 'delivery charges' because there is no such heading of account available in the balance-sheet of the company for the year 1983-84. In rebuttal of these findings of the Collector, the appellants' learned representative urges that the price list clearly shows that 'transportation, handling etc. EXTRA'. The 'delivery charges' mentioned above are merely handling charges incurred outside the factory gate. These expenses form part of the transportation expenses and deductions for which have been claimed in col. 13 of the price list, as mentioned above. It is also incorrect that these expenses are not shown in the balance-sheet. They are shown in the accounts under the head 'contract labour charges'. For the proposition that 'delivery charges' form part of the transportation cost, the learned Chartered Accountant relies on Supreme Court's decision in....
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....ayment to the other transport agencies. The appellants, on the other hand, contend that it is an admitted fact that the goods in question were carried by vehicles belonging to other companies as is evident by correlating the vehicle numbers with the gate passes. Copies of these gate passes were submitted to the Central Excise authorities at the end of each month alongwith the R.T. 12 returns. Ownership of these vehicles by the other agencies has also not been doubted by the other department. It is urged that it is unthinkable that the vehicles of other agencies would carry lakh of crates of aerated water bottles without any cost. Merely because the debit notes were raised subsequently, it does not mean that the expenses towards the cost of transportation was not incurred by the appellants. The moment the other transport agencies carry the excisable goods of the appellants, the transportation charges became payable by the appellants. Deduction towards cost of transportation under Sec. 4(2) of the CESA, 1944 does not depend upon the actual payment in the same financial year. They have further submitted that on the basis of the evidence produced before the learned Commissioner of Inco....
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.... the tax is not dependent upon assessment or demand but is an obligation to pay the tax. [Paras 6 and 8]." We have carefully considered the pleas advanced from both sides for deduction under this head. We are of the view that the finding of an afterthought by the adjudicating authority in regard to debit notes of 30th April, 1985 is perfunctory. The fact that the goods were transported by different vehicles cannot be denied on the basis of the gate passes. In fact this point was specifically taken before the Collector by the appellants and all the details were furnished before him. Merely because the payment towards the cost of transportation has been made in subsequent financial years it does not mean that the liability of cost of transportation has not been incurred by the appellants during the relevant financial year. Section 4(2) makes it mandatory that where in relation to any excisable goods the price thereof for delivery at the place of removal is not known and the value thereof is determined with reference to the price for delivery at a place other than the place of removal, the cost of transportation from the place of removal to the place of delivery shall be excluded f....