1. E/Misc/387/86-A - The Misc. application is seeking permission to take up additional ground in the appeal relating to limitation. Shri A.N. Sharma, the learned consultant appearing for the applicants submits that this is a point of law that the demand for duty issued beyond six months is hit by limitation under Rule 173-J read with Rule 10 of the Central Excise Rules, 1944. Shri S. Krishnamurthy, the learned Senior Departmental Representative opposes the petition. On a consideration of the submissions made, we find that the petition seeks to add ground to the appeal on limitation which, being a question of law, is allowed.
Appeal No, E/874/81-A - The appeal is directed against the order dated 28-2-1981 passed by the Central Board of Excise & Customs which had upheld the order dated 10-7-1980 passed by the Collector of Central Excise, New Delhi upholding the demand for duty of Rs. 1,28,824.23 under Rule 9(2) of the Central Excise Rules. The Board, however, set aside the penalty on the appellants imposed by the Collector. The facts in brief are that on 14-2-1979, the Preventive Officers of Central Excise, MOD-III visited the appellant's factory manufacturing chromium plated bath-room fittings in Delhi, falling under the erstwhile Central Excise Tariff Item 68. On a scrutiny of the records, it was found that the appellant's total sales during the year 1977-78 had exceeded Rs. 30 lakhs. Therefore, they were not eligible for the exemption under Notification 176/77 dated 18-6-1977. Under this notification, exemption would not be applicable to a manufacturer if the total value of all excisable goods cleared by him in the preceding financial year exceeded Rs. 30 lakhs. Since the department found from the appellant's records that their clearances during the financial year 1977-78 had exceeded Rs. 30 lakhs, proceedings were initiated against them for demanding duty and for penalty for having removed goods without licence, and without payment of duty, which culminated in the Collector's adjudicating order. The appeal against the Collector's order was disposed of by the Board, who upheld the demand for duty and set aside the penalty.
2. Shri A.N. Sharma, the learned consultant appearing for the appellants submitted that in calculating the value of clearances, the Collector has accepted the position that the value should be determined in accordance with the provisions of Section 4 of the Central Excises & Salt Act, 1944 and having done so, the learned consultant pointed out that the Collector as well as the Board had not given due consideration to the deduction of the elements from the assessable value which are in the nature of post-manufacturing costs. The Central Board of Excise & Customs had also misdirected itself by holding that the turnover discount not uniformally available to all dealers would not be deductable. The learned counsel submitted that on the other hand, the appellants had a schedule for the grant of quantity discount depending upon value of goods purchased. All the buyers are eligible for this quantity discount on the basis of the schedule which were duly granted by the appellants uniformally. He referred to the copy of the statement showing the details of the quantity discount given dealers during the year 1977-78, enclosed to the appeal. Hence, this discount uniformally available to all their dealers ought to have been allowed. It was also contended that the commission paid by the appellants to its various agents during 1977-78 should also be excluded from the assessable value. Similarly, in respect of turnover discount also, the appellants were making it available to the dealers uniformally. The learned consultant further argued that it was not stipulated in Section 4 of Central Excises & Salt Act, 1944 that the trade discount to be admissible should be uniformally given. He relied upon the Gujarat High Court judgement in the case of Union of India v. Jyoti Ltd., Baroda -1978 (2) ELT (J-238) as also the general principles laid down by the Supreme Court in the Bombay Tyre International case -1984 (17) ELT 329.
The learned consultant also pointed out that no deductions have been allowed from the value relating to packing whereas it has been clearly laid down by the Supreme Court in the case of Bombay Tyre International cited above as well as in the case of Union of India v. Godfrey Philips India Ltd. & Ors. -1985 (22) ELT 306 that packing costs are to the excluded from the assessable value. Another point made by the learned consultant was that the Collector has included in the calculations for demanding duty, the value of the goods exported, and this was not warranted by the very wording of the exemption notification which refers only to clearances for home consumption. He also cited and relied upon the case of Super Traders v. Collector of Central Excise -1987 (24) ELT 338 of this Tribunal in this connection. The learned consultant further argued that the demand was clearly barred by limitation because there is nothing in the Show Cause Notice to allege suppression of facts by the appellants and the Board itself in this Appellate order had found no malafides on their part and had set aside the penalty on them for this reason.
3. The learned Senior Departmental Representative adopted the reason governed by the Collector and the Board in their orders and also relied upon the case law Coromandel Fertilisers Ltd. v. Union of India reported in 1984 (17) ELT 607 for the proposition that commission paid, which is not available to all dealers, is not to be deducted.
4. We have given careful consideration to the submissions made by the learned consultant and the learned SDR. The issue involved is to the admissibility of the deductions of the elements of costs by the appellants from the assessable value for purposes of determining their eligibility to exemption under notification 176/77. It is seen from the records that the appellants claimed deductions on account of various elements such as transport cost, cost of packing, trade discount, turnover bonus to dealers and cash discount as well as banking charges.
In dealing with these claims it is found that the Collector had pointed out in his order that though appellants have said that their invoice values included all these elements and that these elements are to be deducted therefrom. They had not disclosed the nature of their sale and service organization or turnover nature of their arrangements with the transporters, distributors etc ...". The Collector had also found that the sale account of the appellants did not disclose any cost element on account of freight or insurance and in respect of bank charges that the appellants had not disclosed any evidence. We consider this aspect very significant that the invoice of the appellants did not indicate the discounts or deductions. Therefore, the Collector, in the absence of material evidence to back-up the claim for deduction from the invoiced value was right in concluding that no deduction can be allowed on apportionment basis. It is, therefore, clear that the invoices themselves were silent in respect of the discounts and other deductions given and now claimed by the appellants. It is in this context, one has to consider the finding of the Board at the Appellate stage that during the hearing before it when some of their invoices were shown to the Board, it was stated by one of the partners that the cash discount as well as the turnover discount was allowed only to their established dealers and not to all customers and that further, since they did not intend to allow such discounts to other than their established dealers, they had not got printed the provision of uniform cash discount in their invoices, but were putting their individual rubber stamp to that effect in the invoices issued to their established dealers only.
Therefore, it is clear from the evidence that the discounts offered by the appellants were not of such nature as would be available to any dealer purchasing goods from them. It is in this sense that uniformity is referred to. Normally, a particular percentage of discount should be available to all dealers in the trade irrespective of region or relationship with a manufacturer. The Gujarat High Court judgment in the Jyoti Ltd. case was also on this aspect. In that case, there were two rates of discounts given normally. 15% to all the dealers in the trade and a higher l8 /2% to their sole-selling agents by M/s. Jyoti Ltd. and the Court held that 15% discount, which is available to all dealers should be allowed to be deducted from the assessable value. It has further been contended by the appellant's hearing that they do have a scale of quantity discount depending upon the value of the goods sold. For this, the evidence now produced is a statement of quantity discount given to dealers on their up-lift which statement has been certified by a Chartered Accountant. It is not known as to the date on which the certification was made by the Chartered Accountant, and when it was specifically put to the appellants during the hearing whether this schedule was known to all dealers by way of circular letters or correspondence, no satisfactory response was forthcoming. Similarly also is the case relating to the statement of commission account and the statement of "Secondary" packing account. Therefore, there is lack of satisfactory evidence regarding the availability of discount to the trade in which the appellants are engaged and in such a situation, the dis-allowance of this discount is well founded. As regards the value of the goods cleared for export, the value of such goods, according to the Collector's order, comes to Rs. 98,729.79. The appellant's claim is that this should be excluded while calculating the Rs. 30 lakhs exemption limit under the notification. We observe that this is a question of fact and the appellants are raising this issue for the first time before the Tribunal in a second appeal. Further, even if this were to be held deductable in view of what we have held already in respect of the deductions claimed, the appellant's clearance would still be over Rs. 30 lakhs in the preceding financial year, and a finding for the first time in a second appeal on this factual issue is, therefore, neither appropriate nor necessary. On the question of limitation, a perusal of the show cause notice shows that the notice has been issued under Rule 9(2) for removal of excisable goods without payment of duty and Rule 174 among other Rules for operating without a licence is not, therefore, a notice for short levy under Rule 173J read with Rule 10. Admittedly, there has been removal of the excisable goods from the place of manufacture without assessment of duty thereon.
Therefore, the arguments put-forth in respect of a notice for short levy do not have much force in such a situation and have to be rejected. In the circumstances, we see no reason to interfere with the order passed by the Central Board of Ex. & Cus. The appeal is rejected.