M/S Spice Systems Ltd vs Cce, Meerut

[Arising out of the Order-in-Appeal No. 63-64/CE/MRT-I/2006 dated 25/04/2006 passed by The Commissioner (Appeals), Customs and Central Excise, Meerut.]

For Approval and signature :

Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

1. Whether Press Reporters may be allowed to see :

the Order for publication as per Rule 27 of the

CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of :

the CESTAT (Procedure) Rules, 1982 for

publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair :

copy of the order?

4. Whether order is to be circulated to the :

Department Authorities?

M/s Spice Systems Ltd. Appellant

Versus

CCE, Meerut Respondent

Appearance

Shri B.L. Narsimhan, Advocate  for the appellant.

Shri Ranjan Khanna, Authorized Representative (DR)  for the Respondent.

CORAM: Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

Final Order No. 52581-52582/2015 Dated : 10/08/2015

Per. B. Ravichandran :-

These appeals are filed by the appellant against the order of the learned Commissioner (Appeals) and they are taken up together as the issue involved is same. The appellants are engaged in the manufacture of Punching and Binding machines, Laminating machines, Shredding Machines subject to Central Excise duty. These products are sold by them through their dealers and to some customers through their depots. The Revenue initiated action against the appellant on the ground that the value for assessment should be the price they charged from their buyers from the depot though the appellant had sale at factory gate also. Various show cause notices were issued for the period from September 1996 to June 1999 to demand duty on the differential value. The Original Authority confirmed these demands and imposed equal penalty. On appeal filed by the appellant learned Commissioner (Appeals) upheld these orders. Aggrieved by these appellate orders, the appellant is before us. It was pleaded on behalf of the appellant that 25% of their production are cleared at the factory gate on sales and remaining 75% are cleared on stock transfer to their depots from where the goods were sold on retail prices.

The Department adopted the retail price to demand the differential duty from them. There is no dispute that the appellants have genuine factory gate sales during the relevant period. In respect of stock transferred goods also their valuation fulfills all the requirements of Section 4 (1) (a) of the Central Excise Act, 1944, as available during the relevant time. They have pleaded that for stock transfer the duty has to be paid based on the prices prevailing at the depot at the time of removal and not on the actual price of the goods sold from the depot. They relied on the Circular No. 251/85/96-CX. dated 14/10/1996. In other words, the goods are to be assessed at the price prevalent on the date of removal from the factory instead of assessing them based on the value of goods at the time of actual sale from the depot. Further, the appellants pleaded that the demand for differential duty is wrong on the ground that the price at which they are selling goods from the depot to the retail customers in quantities of one or two cannot be the basis for assessable value. It is settled principal of law that excise duty cannot be demanded based on retail sale price either at the factory gate or at the depot.

Without prejudice to this contention, the appellant also argued that even if retail price is taken suitable deductions are to be allowed.

2. During the course of argument, the learned Counsel for the appellant drew our attention to the provisions of Section 4 (1) (a) as it existed during the relevant time to state that the value for charging excise duty shall be deemed to be the normal price, thereafter, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal. He contended that when such value is available there is no legal basis to adopt their retail sale price from depot as normal price for Central Excise Valuation. It was pleaded that the lower authority held erroneously that the depot was meant for wholesale trade and not for retail sale. The basis of such assertion is not clear.

3. The learned AR reiterating the findings of the lower authorities.

4. Heard both the sides and considered the submissions. The point for decision is whether or not the appellants are liable for differential duty on account of not following the provisions of Section 4 (1) (a) in respect of goods cleared by them. The admitted facts are that they are having normal wholesale price at the factory gate in respect of impugned goods and also in respect of clearances from depot they are to pay duty in terms of price prevailing at the depot at the time of clearances of such goods from the factory. The Revenue took the view that the price from depot has to be taken as the appellants claim of retail sale from depot was rejected. We find that the provisions as they existed during the relevant period for the purpose of valuation clearly state that the value shall be deemed to be normal price during the course of wholesale trade. The presumption made by the lower authority that depots are meant for wholesale trade and hence depot prices will be taken as normal price is neither factually nor legally tenable. The appellant strongly contended that the sale of one or two products at a time to the ultimate customer is nothing but retail sale and cannot be taken for Central Excise assessment purposes. We also find that this Tribunal in the case of Camphor & Allied Products Ltd. vs. CCE, Lucknow reported in 2000 (122) E.L.T. 171 (Tribunal) held that in case of sale from depot duty was payable at the price prevailing at the depot at the time of removal from the factory. Similar view was held in Lipi Data Systems Limited vs. CCE, Jaipur  II reported in 2001 (130) E.L.T. 91 (Tri.  Del.) and Steel Authority of India Ltd. vs. CCE, Raipur reported in 2006 (199) E.L.T. 112 (Tri.  Del.). Considering the above factual and legal position, we find no merit in the lower authorities order and accordingly set aside the same and allow the appeals with consequential relief, if any.

(Operative part of the order pronounced in the open court.)

(Ashok Jindal)

Member (Judicial)

(B. Ravichandran)

Member (Technical)

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