TaxTMI 
TaxTMI 
2014 (7) TMI 1183
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....bearing No. AD5/83-84 and No. AD 5A/83-84 effective from 30-12-1983 declaring wholesale prices at factory gate under Section 4 of Central Excise Act, 1944 which were approved finally by the divisional Assistant Collector on 19-6-1984. Thereafter, they filed fresh price lists bearing No. Ad-1A/84-85 and AD1B/84-85, effective from 1-9-1984 without any change in the wholesale prices and assessable values, which were also approved finally by Assistant Collector. These two price lists were effective till 7-4-1985. During the period from 30-12-1983 to 7-4-1985 the appellant filed monthly RT-12 returns, as required under Rule 173G of the said rules, for the purpose of assessment of duty on the said goods under Rule 173I. The Superintendent of Central Excise directed the appellants to produce sales invoices raised by them for sale of said goods for verification of sale proceeds realized vis-à-vis wholesale price of the goods declared by them in their price lists. As the appellants failed to produce the sale invoices, the Superintendent could not verify the genuineness of the wholesale prices declared in the pricelists and, therefore, he passed orders of provisional assessment on the....
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.... passed an order under Section 35E(1) of the said Act directing the Collector of Central Excise to make an application to Customs, Excise and Gold Appellate Tribunal, New Delhi. The appellants took this matter to the Hon'ble Bombay High Court on the ground of judicial propriety, and Hon'ble Bombay High Court stayed the proceedings before the Tribunal. Meanwhile, Hon'ble Supreme Court on 1-2-1989 scrapped the said two show cause notices dated 23-4-1986 and dated 24-7-1986 as well as adjudication order dated 31-12-1987 with liberty to Revenue to issue fresh show cause notice. Then Collector of Central Excise issued show cause notice bearing No. V.Adj(29A)15-45/89/B.III, dated 31-3-1989 to M/s. Voltas Ltd. for demand of differential Central Excise duty of Rs. 14,92,32,323.17 on the said goods for the period from 30-12-1983 to 28-2-1986 and for imposition of penalty. Appellants challenged the show cause notice dated 31-3-1989 before the Hon'ble Bombay High Court by filing the Writ Petition No. 1377 of 1990. Mr. A.T.H. Tobbaccovala, Chairman of M/s. Voltas Ltd. and others filed writ petition No. 727 of 1990 in the Bombay High Court challenging therein the issue of said show cause notice....
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....ne, was not a normal sale as required under Section 4 of the said Act since it allowed the clearance of only a small number i.e. first 120 Nos. room air conditioners in any financial year (at the rate 10 Nos. room air conditioner per month) to M/s. Shah and Sanghi. Thus there was a restriction on the quantity of clearance goods. And for any excess quantity of room air conditioners required by M/s. Shah & Sanghi, Thane, the price was charged on the basis of the actual wholesale prices of the goods based on price circular issued by the appellants from time to time prevalent during the said period and applicable to all Thane and upcountry Maharashtra authorized wholesale dealers. (b) All other authorized wholesale dealers of Thane and upcountry Maharashtra region who took delivery of goods either from the factory at Thane or from their sales depot at Bombay were charged normal wholesale prices applicable as per wholesale dealers price circulars issued. The price difference between the Bombay city dealers prices and Thane upcountry dealers prices was only to extent of Bombay octroi duty. (c) The two authorized wholesale ....
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....lant should have declared the correct wholesale prices effective from 30-12-1983 to 28-2-1986 by including technical service charges and advertising expenses which they had failed to declare. 4.2 The appellants were show caused in the notice dated 28-10-1994 (i) why the wholesale prices declared by them during the said period should not be rejected and why the values shown in Col.No.7 of Annexure "X" should not be considered as the correct value under Section 4 of the said Act for the purpose of determination of correct assessable value (ii) why the pending price lists filed by the said assessee for the said goods and effective from 8-4-1985 to 28-2-1986 and shown in Annexure 'Z' should not be finally approved on the basis of revised wholesale prices shown in the column No. 7 of the Annexure "X" to this notice and, (iii) why the provisional assessment of duty said goods made for the period from 30-12-1983 to 28-2-1986 should not be finalized and why the Central Excise duty should not be finally assessed under Rule 173I of the said Rules on the basis of revised wholesale prices and assessa....
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....ed only to the extent of actual payment thereof. The appellant are before us in appeal against this Order-in-Appeal. 5. Heard both sides. The appellant and Revenue have placed written submissions. 6. The contention of the appellant may be summed up as below : (i) They have effected a small portion of the sales at the factory gate and therefore, declared the factory gate price as the wholesale price in respect of all sales whether at the factory gate or through the network of branches and dealers. They relied on the Supreme Court decision in the case of A.K. Roy v. Voltas Ltd. - 1977 (1) E.L.T. J177 (S.C.) to justify that the price at the factory gate must be regarded irrespective of the proportion of sales through branches. They were levying charges under the name of technical services which had no relation to manufacture or marketability of their goods. Further, these charges were recovered from their dealers through debit notes and invoices raised by them on the dealers. These charges were being recovered on ongoing basis even before 1983 as onsite service charges. Onsite service charges were not includible in the assessable ....
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....ng requirements and selection of appropriate units for a given space. (b) Providing technical advice on issues such as electrical wiring, power supply, plumbing, false ceilings etc. (c) Installation and commissioning of air conditioners, particularly in cases of non-standard installations. (d) Assistance in trouble-shooting at the customer's site when efforts to solve problems by dealers' staff were not successful. (e) Rendering advice regarding repair procedures, quality control, testing standards etc. at the dealer's service station. (f) Training and demonstration to sales and service staff of the dealers. (g) Designing information systems required for the units under maintenance service. (h) Assisting in obtaining financial arrangements with leasing companies etc. (ii) He showed copies of invoices which indicate that technical charges were not shown in the same. He drew our attention to Annexure "Z" to the Show Cause Notice to show that this Annexure....
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....p; Revision in prices (page 419) dated 6-10-1993 (v) Technical service charge in nomenclature (page 354) (vi) Invoicing pattern (page 352-365) (vii) Statement of regional sales manager (page 233-235) (viii) Statement of M.D. Silver Jubilee Motors (page 229) (ix) Upcountry prices (page 341) (x) Legal opinion (page 324) (xi) Cost per unit (page 319) (xii) Statement of Manager Sah & Sanghi (page 287-290) (xiii) Legal opinion (page 356) (xiv) Change in price of RAC (page 381) letter dated 2-5-1985 to M/s. Sah & Sanghi (xv) Draft Agreement (page 369) (xvi) Invoicing pattern to M/s. Sah & Sanghi (page 390) (xvii) Technical service fee to be levied from M/s. Sah & Sanghi, letter dated 25-7-1985 (page 395) (xviii) Prote....
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....ve for the period 30-12-1983 to 7-4-1985 is sustainable. (iii) Whether deduction on account of surcharge on the additional sales tax on the revised prices, if prices are revised as per (i), is to be allowed for arriving at the assessable value for calculation of duty. 10. As regards the technical service fee, the appellant relied heavily on the judgment of the Hon'ble Bombay High Court dated 9-7-1991 in their own case to plead that these services are akin to on-site services considered in the said judgment. We have seen the judgment. It reads as under : "In our judgment the site service charges are recovered by the Company for rendering special service for giving advice in regard to the manner of installation and the charges recovered for rendering such service cannot be included while determining the assessable value of the Unit. The customer is not bound to purchase the air-conditioner or water cooler from the company even though the design assistance for special type of installation is secured from the Company by payment of site service charges. In our judgment, the site service charges are required to be excluded while determining the asses....
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....ditioner and the other part by raising debit note. The cost audit report for the year 1982-83 which is furnished to Company Law Board shows that the ex-party price declared was less than that shown in the cost audit report. These facts came to light only after investigations were conducted by the Department in 1986 and documents were recovered. 10.2 We also note that the RT-12 assessments were made provisional for all the pricelists approved as well as provisionally approved, because the appellant failed to produce the sale invoices when asked by the Superintendent. Only the sale invoices would have revealed the actual sale proceeds realized viz-a-viz the wholesale price declared in the pricelists. In the absence of sale invoices the RT-12 assessments could not be finalized. We therefore, hold that the technical service fee recovered from the dealers by the appellant must be added to the prices declared in the pricelists to arrive at the assessable value as enumerated in Annexure "X" to the show cause notice. And the pricelists are ordered to be finalized accordingly. 10.3 The appellants have also challenged the validity of revision of pricelists already approved....
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.... assessments for the period 30-12-1983 to 28-2-1986 should not be finally assessed on basis of revised wholesale prices, no other conclusion can be drawn except that the approved pricelists are also sought to be revised by issue of the show cause notice. In fact, appellants appear to be asking contradictory stands at different times. Initially, when the case was before the Supreme Court in 1993, the appellants' stand was that notice under Section 11A is not maintainable because the provisional RT-12 assessments are pending finalization. Now the appellant has reversed its stand and contends that the RT-12 assessments cannot be finalized by revising pricelists which are already approved because notice under Section 11A would be necessary. We note that the Supreme Court in its order dated 1-3-1993 in Appeal No. 15370/92 held that "....It would be open to the assessing authority to rely upon the material already indicated in the show cause notice dated 3-13-1989 or any further material, as it may think necessary subject, however, to the respondent assessee being afforded an opportunity to meet the case put against it............" It is apparent that the Supreme Court had su....