Universal Ferro and Allied Vs. Collr. of C. Ex. - Court Judgment

Excerpt:
1. the common-appellant in these appeals is not represented in spite of notice of hearing, but has sent a request for decision of the appeals without hearing the appellant's representative. we have heard shri k.srivastava, sdr and perused the papers.--------------------------------------------------------------------------------appeal no. date of order ap- no. of appeals disposed nature of the pealed against of by collector (appeals) proceeding--------------------------------------------------------------------------------747/93-a 26-11-1992 10 8 refund claims two demands748/93-a 18-1-1993 1 demand749/93-a 19-1-1993 1 refund claim750/93-a 1-1-1993 1 two demands751/93-a 10-2-1993 1 demand752/93-a 26-11-1992 5 five refund claims 3. against the order dated 26-11-1992 passed by the collector (appeals), appellant is required to file ten separate appeals before the tribunal, but has filed only a single appeal. therefore, this appeal has to be treated as an appeal only against one of the appeals disposed of by the collector (appeals) by the common order. we will treat appeal e/747/93-a as an appeal against the order passed by the collector (appeals) confirming the rejection of the refund claim for rs. 5,77,821/-, since this amount is the largest amount involved in the eight refund claims and two demands. we will proceed on the basis that the appellant has not filed appeal before the tribunal against the rejection of nine appeals filed by the appellant before the collector (appeals) and disposed of by collector (appeals) by order dated 26-11-1992.4. similarly, we will treat appeal no. e/752/93-a as an appeal filed against order dated 26-11-1992 passed by the collector (appeals) dismissing the appeal against the rejection of refund claim of rs. 26,084.00 being the largest amount involved in all the five refund claims. in other words, we proceed on the basis that the appellant has not challenged before the tribunal rejection of the other four refund claims by the assistant collector.5. appellant, engaged in the manufacture of ferro-manganese alloys, was selling the same to bhilai steel plant, bhilai on the basis of contracts and clearing the goods on payment of duty on approved prices.the contract fixed prices on the basis of the manganese content of the product as well as on the weight. appellant was arranging test of samples for the purpose of determining the composition which will have a bearing on the price. on the basis of composition and weight determined in the manufacturing premises, appellant was arriving at the prices of the consignments on the basis of the formula provided in the contracts and paying duty on such value. the contracts also provided for testing and weighment at the premises of bhilai steel plant and further provided that the composition and weight as found in the premises of bhilai steel plant by testing and weighment will be the basis to be accepted by both sides for quantification of price on the basis of the formula in the contracts. in some cases it was found that the test conducted at bhilai steel plant indicated presence of lesser manganese content and weighment indicated lesser weight as a consequence of which the price payable for such consignments was less than the price declared at the time of clearances by the appellant.according to the terms of the contracts, price was to be paid on the basis of composition and weight determined by bhilai steel plant. in this view, the prices declared by the appellant for these consignments were actually found to be more than the actual price and duty paid was also found to be in excess of the correct duty payable. on this basis, various refund claims were filed and the same have been dismissed. in a few cases on finding that less duty was actually payable, the appellant took credit for the excess payment made in the pla and when this was discovered, show cause notices were issued to the appellant proposing demand of amount of credit taken of. these demands have been confirmed in spite of opposition by the appellant.6. the lower authorities have taken the view that according to section 4(1)(a) of the central excise act, 1944, normal price is the price at which the goods are ordinarily sold in the course of wholesale trade/or delivery at the time and place of removal, the composition and weight declared by the appellant at the time of removal or clearance would determine the normal price and the normal price so arrived at cannot be interfered with on the basis of the composition and weight determined when the goods reached the buyer's premises. the lower authorities also indicated that if the parties wanted to be governed by the composition and weight determined by the buyer, the buyer should have been asked to so determine the same in the premises of the manufacturer before clearance and the subsequent determination will not be binding on the department. shri k. srivastava, sdr also emphasised this reasoning.7. we are of opinion that the lower authorities did not look at the dispute from the correct perspective. no doubt, normal price is the price at which the 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; in other words, the enquiry should be to find the normal price of goods for delivery at the time and place of removal. where the goods are such that price per unit can be arrived at without any complicated exercise the assessee can arrive at the price and assessable value can be determined at the time of clearance on that basis. where, however, price is arrived at on the basis of the percentage of manganese present in the goods and the weight of the goods, determination of the manganese content by the manufacturer before clearance will not necessarily be binding on the buyer. the buyer in the case is a public sector undertaking which normally takes care of all possible contingencies which may go against its interest. it was stated in the contract that the composition and weight determined in the premises of the buyer shall be binding on both the parties. where composition and weight of a particular consignment are determined a few days after the clearance in the premises of the buyer such composition and weight would be regarded as composition and weight of the consignment cleared at the factory a few days earlier. acceptance of the case of the appellant would not be a departure from the requirement of section 4(1)(a) of the act that the normal price is the price at the time and place of removal.8. the department has no case that the composition and weight determined prior to the clearance by the manufacturer were correct and either in transit or at the premises of bhilai steel plant something happened which changed the composition and weight of the consignment.in the nature of the goods there could be some difference in the results of test conducted by two experts and in the nature of the manner of transportation, there could be some difference in the weight also at the two ends. the contracting parties agreed that the composition and weight at the buyer's end would be binding on both the parties. we see no reason to hold that such composition and weight should be regarded as the result of events transpiring subsequent to the time of clearance or can be ignored by the department. we again emphasise that the department has no case that there was anything erroneous in the composition or weight found at the buyer's end. in the absence of any specific allegation to the contra, one must proceed on the basis that the consignments cleared at the appellant's factory were of the composition and weight determined for each consignment at the buyer's end. this may affect the quantum of the assessable value and consequently the quantum of duty. duty has to be arrived at on that basis and if refund is otherwise justified under law, refund has to be allowed. in cases where demand has been confirmed by the impugned orders, the adjudicating authority will accept the composition and weight as determined at the buyer's end, redetermine the assessable value and recompute the amount of duty payable and if any differential duty is due as a consequence of credit taken by the appellant, to that extent the demands have to be confirmed.9. for the reasons indicated above, the orders passed by the collector (appeals) against which the present appeals have been filed (as explained by us earlier), are set aside and the cases are remanded to the jurisdictional adjudicating authority for reconsideration of the subject refund claims and subject demands in accordance with law and the directions in this order and after giving the appellant an opportunity of hearing. the appeals are accordingly allowed.

Judgment:
1. The common-appellant in these appeals is not represented in spite of notice of hearing, but has sent a request for decision of the appeals without hearing the appellant's representative. We have heard Shri K.Srivastava, SDR and perused the papers.--------------------------------------------------------------------------------Appeal No. Date of order ap- No. of appeals disposed Nature of the pealed against of by Collector (Appeals) proceeding--------------------------------------------------------------------------------747/93-A 26-11-1992 10 8 refund claims two demands748/93-A 18-1-1993 1 Demand749/93-A 19-1-1993 1 Refund claim750/93-A 1-1-1993 1 Two demands751/93-A 10-2-1993 1 Demand752/93-A 26-11-1992 5 Five refund claims 3. Against the order dated 26-11-1992 passed by the Collector (Appeals), appellant is required to file ten separate appeals before the Tribunal, but has filed only a single appeal. Therefore, this appeal has to be treated as an appeal only against one of the appeals disposed of by the Collector (Appeals) by the common order. We will treat Appeal E/747/93-A as an appeal against the order passed by the Collector (Appeals) confirming the rejection of the refund claim for Rs. 5,77,821/-, since this amount is the largest amount involved in the eight refund claims and two demands. We will proceed on the basis that the appellant has not filed appeal before the Tribunal against the rejection of nine appeals filed by the appellant before the Collector (Appeals) and disposed of by Collector (Appeals) by order dated 26-11-1992.

4. Similarly, we will treat Appeal No. E/752/93-A as an appeal filed against order dated 26-11-1992 passed by the Collector (Appeals) dismissing the appeal against the rejection of refund claim of Rs. 26,084.00 being the largest amount involved in all the five refund claims. In other words, we proceed on the basis that the appellant has not challenged before the Tribunal rejection of the other four refund claims by the Assistant Collector.

5. Appellant, engaged in the manufacture of ferro-manganese alloys, was selling the same to Bhilai Steel Plant, Bhilai on the basis of contracts and clearing the goods on payment of duty on approved prices.

The contract fixed prices on the basis of the manganese content of the product as well as on the weight. Appellant was arranging test of samples for the purpose of determining the composition which will have a bearing on the price. On the basis of composition and weight determined in the manufacturing premises, appellant was arriving at the prices of the consignments on the basis of the formula provided in the contracts and paying duty on such value. The contracts also provided for testing and weighment at the premises of Bhilai Steel Plant and further provided that the composition and weight as found in the premises of Bhilai Steel Plant by testing and weighment will be the basis to be accepted by both sides for quantification of price on the basis of the formula in the contracts. In some cases it was found that the test conducted at Bhilai Steel Plant indicated presence of lesser manganese content and weighment indicated lesser weight as a consequence of which the price payable for such consignments was less than the price declared at the time of clearances by the appellant.

According to the terms of the contracts, price was to be paid on the basis of composition and weight determined by Bhilai Steel Plant. In this view, the prices declared by the appellant for these consignments were actually found to be more than the actual price and duty paid was also found to be in excess of the correct duty payable. On this basis, various refund claims were filed and the same have been dismissed. In a few cases on finding that less duty was actually payable, the appellant took credit for the excess payment made in the PLA and when this was discovered, show cause notices were issued to the appellant proposing demand of amount of credit taken of. These demands have been confirmed in spite of opposition by the appellant.

6. The lower authorities have taken the view that according to Section 4(1)(a) of the Central Excise Act, 1944, normal price is the price at which the goods are ordinarily sold in the course of wholesale trade/or delivery at the time and place of removal, the composition and weight declared by the appellant at the time of removal or clearance would determine the normal price and the normal price so arrived at cannot be interfered with on the basis of the composition and weight determined when the goods reached the buyer's premises. The lower authorities also indicated that if the parties wanted to be governed by the composition and weight determined by the buyer, the buyer should have been asked to so determine the same in the premises of the manufacturer before clearance and the subsequent determination will not be binding on the department. Shri K. Srivastava, SDR also emphasised this reasoning.

7. We are of opinion that the lower authorities did not look at the dispute from the correct perspective. No doubt, normal price is the price at which the 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; in other words, the enquiry should be to find the normal price of goods for delivery at the time and place of removal. Where the goods are such that price per unit can be arrived at without any complicated exercise the assessee can arrive at the price and assessable value can be determined at the time of clearance on that basis. Where, however, price is arrived at on the basis of the percentage of manganese present in the goods and the weight of the goods, determination of the manganese content by the manufacturer before clearance will not necessarily be binding on the buyer. The buyer in the case is a Public Sector Undertaking which normally takes care of all possible contingencies which may go against its interest. It was stated in the contract that the composition and weight determined in the premises of the buyer shall be binding on both the parties. Where composition and weight of a particular consignment are determined a few days after the clearance in the premises of the buyer such composition and weight would be regarded as composition and weight of the consignment cleared at the factory a few days earlier. Acceptance of the case of the appellant would not be a departure from the requirement of Section 4(1)(a) of the Act that the normal price is the price at the time and place of removal.

8. The Department has no case that the composition and weight determined prior to the clearance by the manufacturer were correct and either in transit or at the premises of Bhilai Steel Plant something happened which changed the composition and weight of the consignment.

In the nature of the goods there could be some difference in the results of test conducted by two experts and in the nature of the manner of transportation, there could be some difference in the weight also at the two ends. The contracting parties agreed that the composition and weight at the buyer's end would be binding on both the parties. We see no reason to hold that such composition and weight should be regarded as the result of events transpiring subsequent to the time of clearance or can be ignored by the Department. We again emphasise that the Department has no case that there was anything erroneous in the composition or weight found at the buyer's end. In the absence of any specific allegation to the contra, one must proceed on the basis that the consignments cleared at the appellant's factory were of the composition and weight determined for each consignment at the buyer's end. This may affect the quantum of the assessable value and consequently the quantum of duty. Duty has to be arrived at on that basis and if refund is otherwise justified under law, refund has to be allowed. In cases where demand has been confirmed by the impugned orders, the adjudicating authority will accept the composition and weight as determined at the buyer's end, redetermine the assessable value and recompute the amount of duty payable and if any differential duty is due as a consequence of credit taken by the appellant, to that extent the demands have to be confirmed.

9. For the reasons indicated above, the orders passed by the Collector (Appeals) against which the present appeals have been filed (as explained by us earlier), are set aside and the cases are remanded to the jurisdictional adjudicating authority for reconsideration of the subject refund claims and subject demands in accordance with law and the directions in this order and after giving the appellant an opportunity of hearing. The appeals are accordingly allowed.