TaxTMI 
TaxTMI 
2005 (3) TMI 344
X X X X Extracts X X X X
X X X X Extracts X X X X
....efrigerator business of the appellant's Company. Presently, the appellant is known as Hyderabad Unit of Voltas Ltd. During the relevant period, the appellants were selling the refrigerators at their factory gate to dealers. They were also stock transferring the goods to their Area Sale Offices (ASO) in various places in the country on payment of duty at the factory gate price for sales to dealers. While selling their goods in their area sales offices, the appellants added the transport cost, the inventory cost, the establishment costs at the depot to the ex-factory price. In addition to the above, the taxes payable at the area sales offices were also charged to the dealers. This practice is adopted by the appellants since 1975. The appellants filed price lists in Part I under Section 4(1)(a) of the Act, declaring the price at which the refrigerators to be sold at the factory gate. These price lists have been duly approved. The Department conducted investigations and issued show cause notice to the appellants alleging that the appellants had wrongly applied the factory gate sales price of refrigerators to the goods stock transferred to the area sales offices and sold through the sai....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The sales to dealers in Telangana region is of a small percentage being 5% of the total turnover; (b) Some of the models were not sold at all at the factory gate; (c) These sales can only be considered as retail sale and not in wholesale trade; (d) The dealers in Telangana cannot sell to customers in other states; (e) The dealers in other states therefore cannot purchase at the factory gate. With regard to the above grounds, the learned Advocate submitted that the quantum of sales made to the dealers at factory gate is irrelevant to decide the genuineness. Since the Department does not demand duty on the clearance made at the factory gate, the price at factory gate is accepted as genuine by the Department. The fact that a particular model is not sold at the factory gate cannot dislodge the fact of a factory gate price being available for the same goods. Reliance is placed on the decision of the Supreme Court in the case of A.K. Roy v. Voltas Ltd. [I977 (1) E.L.T. (J 177) (S.C.)]. The sales made ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the goods to the depot, and the casts incurred at the depot with the taxes to the cost of the purchasing dealer. This principle has been well explained by the Tribunal in the case of TELCO Ltd. v. CCE [2004 (178) E.L.T. 622 (T) = 2003 (59) RLT 1032]. Therefore, the learned Advocate urged that the proviso to Section 4(1)(a) cannot be applied. (iv) It was further urged that the decision of the Larger Bench in the case of CCE v. Taparia Tools [2001 (131) E.L.T. 306 (T) = 1999 (34) RLT 369] would not apply in this case, since the said decision was rendered on the basis of evidence placed on records. This distinction has been noted by the Tribunal in the case of TELCO Ltd. referred to earlier. Similarly in the case of Bharat Aluminium Co. [2003 (162) E.L.T. 351 (T) = 2003 (58) RLT 369], the Tribunal has rejected in similar circumstances, the reliance on the Larger Bench decision. The decision of the Apex Court in this case of GOI v. MRF [1995 (77) E.L.T. 433 (S.C.) would not apply in this case since in that case it was a clear case of sale to different classes of buyers namely, the dealers and the Government whereas in the present case, all the sa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pression can be alleged. In view of the above, there are no grounds for invoking larger period. 4. The learned SDR adduce the following arguments :- There is a restriction on the sale of refrigerators from the factory gate. Only dealers from Telangana can purchase from the factory gate. In view of this, we cannot say that the Section 4(1)(a) price exists. In these circumstances, proviso to Section 4(1)(a) would be applicable. The price charged to dealers at the different places is different. A dealer from one area cannot purchase from their depot in another area. In view of this restrictions, the dealers in each area sales office would constitute a class of buyers. The learned SDR urged that this case is squarely covered by the decision of the Tribunal in the case of CCE, Chandigarh v. Taparia Tools Ltd. [2001 (131) E.L.T. 306 (Tri. - L.B.)] wherein it was held that the wholesale buyers at factory gate and wholesale buyers from depot constitute separate classes of buyers. He said that the appellants filed price lists in Part I only. Even though the sales at the factory gate were very few compared to the sales at the regional sales offices, the appellant had moral responsibili....
X X X X Extracts X X X X
X X X X Extracts X X X X
....goods from various area sales offices constitute distinct classes of buyers. Therefore, the price charged by each area sales office should be the assessable value as per Section 4(1)(a)(i). Let us take a re-look at the law prevailing on then. Section 4 of the Act reads as under :- "(1) Where under this Act, the duty of excise is the chargeable on any excisable goods with reference to value, such value shall, subject to the other provisions of this section, be deemed to be - (a) the normal price thereof, that is to say, the price at which such goods, such goods are sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale. Provided that - (i) where, in accordance with the normal practice of wholesale trade in such goods, such goods are sold by the assessee at different prices to different classes of buyers (not being related persons) each such price shall, subject to the existence of the other circumstances specified in clause (a), be dee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rabad when they are available with the area sales office at Ludhiana. Moreover, it would be possible to organise after sales service from dealers in Ludhiana. Moreover reasons of logistic and other factors compelling the appellant to adopt a certain commercial practice have nothing to do with the Central Excise law. Excise authorities cannot contend that excise law alone influences the decision making process of the trade. There is no strong ground to hold that the appellants treat dealers in different areas have different classes of buyers. In these circumstances and in view of the clarification in Board Circular of 1990, there is no merit in the adjudication order. After going through the various correspondence exchanged between the appellants and the Department, we are convinced that the Department was very much aware of marketing pattern of the appellant's unit. Moreover, the Collector (Appeals) had also held that when the factory gate price is available, the price at area sales office cannot be taken up as basis of charging duty. It is also noticed that on the date of issue of adjudication order, the Board's clarification was already therein. Since the Department had full know....