1. The department has filed this appeal against the Order-in-Appeal dated 26-8-1989 passed by the Collector of Central Excise (Appeals), Bombay reversing the Order-in-Appeal dated 24-11-1988 passed by the Assistant Collector, Bombay-III.2. Respondent, engaged in the manufacture of excisable products filed certain price lists claiming deduction on various counts including average freight. These price lists were approved provisionally. Goods were being cleared on payment of appropriate duty on this basis. After the judgment dated 7-10-1983 of the Supreme Court in the Bombay Tyres Intt. case and the clarificatory order dated 14-11-1983, respondent filed price list effective from 1-1-1987 claiming of deductions allowed in the Bombay Tyres Intt. case including deduction for average freight and transit insurance, on the basis of the actuals of preceding account year as reflected in the balance sheet for that year and provisional approval was granted. Respondent submitted certificates from Chartered Accountant showing the percentage of various deductions. There was dispute relating to deduction of cost of secondary packing. The Assistant Collector passed an order disallowing the deduction of secondary packing and also modifying the claim on account of deduction for average freight and transit insurance. Respondent had claimed deduction of 1.95% calculated by dividing the freight charges incurred in the previous year by the net sale price of those goods. The Assistant Collector took the view that 1.95% should be relatable to the gross price, that is without deductions and converted the same into percentage based on net price and arrived at the figure of 1.43% as the average freight on the basis of net price. Respondent had claimed 0.15% deduction on a similar basis in regard to transit insurance and this was reduced to 0.11%. The Collector (Appeals) reversed the finding of the Assistant Collector in regard to average freight and transit insurance and allowed deduction as claimed. This order is now challenged by the department.
3. Whatever be the average freight arrived at and declared by the manufacturer and collected from the buyer, that would be admissible for deduction in view of the decision of the Supreme Court in Baroda Meters case reported in 1997 (94) E.L.T. 13 (S.C.), as long as there is no fraud in arriving at the figure. The department has no such case.
4. Respondent had fixed the average freight to be collected from the buyers, irrespective of the distance factor, on the basis of the previous year's actuals and by dividing the total freight paid in the previous year by the net sale proceeds realised during the previous year. The percentage was arrived at as 1.95%. The Assistant Collector thought that in arriving at the average freight, actual freight collected during the previous year should have been divided by the gross sale proceeds. If this be so, the average freight as percentage arrived at on the basis of net sale proceeds would have to be reduced.
That is what the Assistant Collector did by reducing 1.95% to 1.43%.
This was not permissible. The quantification of the average freight is a matter between the manufacturer and the buyers, unless the department is able to point out any fraud or manipulation in the same. The adjudicating authority cannot change the quantum or percentage of average freight. Further, it appears to us that this controversy has no significance since whatever be the percentage, specific amounts were collected by the manufacturer by way of average freight and when the actual figures are available, such figures are liable to be deducted in arriving at the assessable value. What we have indicated above in regard to average freight would also apply to transit insurance.
5. For the reasons indicated above, we find no ground to interfere and accordingly dismiss the appeal.