Judgment:
1. Appellant is absent in spite of notice of hearing. However, appellant has sent a request for disposal of the appeal on merits.
2. Appellant is engaged in the manufacture of vegetable products falling under erstwhile Tariff Item 13. The prices of vegetable products are control-led by the Government in consultation with the Associations of the Manufacturers and prices have been revised from time to time. At the time relevant to this appeal, the price fixed by the Government was Rs. 229.46. The ex factory price fixed by the Government was Rs. 229.46 for 15 kgs. tin. Admittedly, appellant had been collecting, over and above such ex factory price, at the rate of Rs. 7.70 per tin of 15 kgs. as distribution charges, which was not disclosed in the excise documents. Notice was issued to the appellant to show cause why distribution charges should not be included in the assessable value and differential duty demanded. Appellant resisted the notice. Assistant Collector dropped the show cause notice agreeing with the appellant's contentions. In appeal filed by the Assistant Collector, the Collector (Appeals) reversed the decision and held that distribution charges are to be part of assessable value. This order is now challenged.
3. The Collector (Appeals) held, and this view is supported by Shri M.Ali, JDR, that distribution charges had been taken care of by the Government in fixing the ex factory price and, therefore, the amount collected as distribution charges by the appellant should be treated to be part of the assessable value as that was not against the expenses incurred for distribution charges, which had already been taken care of. This submission does not appear to be correct. The Government order fixed ex factory price as well as retail price (including local taxes).
The difference between the two prices for 15 kgs. in at the relevant time was Rs. 15.04. According to the appellant, this included trade margin, transportation and distribution expenses. This view appears to be reasonable, particularly since the Government order refers to "ex factory price". If distribution charges had been taken care of in fixing such price, it would not have been referred to as ex factory price. "Ex factory price" would mean price at the factory gate.
Distribution expenses are permissible expenses which could not be part of the ex factory price. Such expenses cannot be a part of the assessable value either.
4. For the reasons indicated above, we set aside the Order-in-Appeal No. 10/87(B)(D), dated 30-1-1987 passed by the Collector (Appeals).
Appeal is allowed.