1. Originally preferred as a revision application before the Central Government, on transfer the matter is being treated as an appeal and disposed of accordingly.
2. The issue to be decided in the present appeal is whether the handling charges' charged by the appellants in respect of consignments of property rods made by them on behalf of the various customers formed part of the value of the goods for assessment purposes.
3. Briefly the facts of the case are that the appellants during the relevant period (9-11-1972 to 31-7-1975) were manufacturing Aluminium wire rods. They got duty paid EC grade Aluminium ingots from the producing factories on account of various customers for manufacture of wire rods on job basis. In some cases for delivery of such rods to customers, the appellants charged what has been described as delivery and handling charges. The lower authorities observed that the appellants were paying duty on such rods with reference to the prices fixed under the Aluminium (Control) Order, 1970 (hereinafter referred to as Order) without taking into account the handling charges recovered by them from various customers. Accordingly, the duty liability of the appellants on account of non-inclusion of such handling charges in the assessable value was worked out and after due process of law, the matter was adjudicated by the Assistant Collector, Central Excise, Belgaum vide his order dated 23-6-1976. The Assistant Collector held that as the appellants were charging handling charges over and above the controlled prices fixed under the Order, the assessable value should be fixed by adding the cost of handling charges to the assessable value. As at the relevant time the appellants were charging handling charges on an uniform basis, the Assistant Collector held that such charges be added for arriving at the assessable value of the goods supplied to various parties. Aggrieved with the Assistant Collector's order, the appellants preferred an appeal to the Appellate Collector of Central Excise, Madras. The said Collector vide his order dated 17-5-1977 upheld the order of the Assistant Collector and rejected the appeal. It is against this order of the Appellate Collector that the present appeal has been filed before us.
4. Shri Lachman Dev, the learned consultant for the appellants argued the case. He more or less reiterated the grounds which were urged by the appellants before the Assistant Collector as well as the Appellate Collector. He argued that the total period under dispute is from 9-11-1972 to 31-7-1975. During the entire period, the price of the goods in question was regulated by the provisions of the Order. He explained that the Order which came into force w.e.f. 20-3-1970 stipulated that the sale price would be exclusive of excise duty and also exclusive of transportation charges. The said Order was amended vide Order dated 24-5-1971 whereby Clause 2(f) was amended providing that the sale price would be inclusive of duties of excise but exclusive of transport charges or insurance charges etc. The said Order was again amended w.e.f. 11-3-1975 and again the sale price was made exclusive of excise duty and exclusive of transportation charges. As the period in dispute covers 9-11-1972 to 10-3-1975 the composition of sale price as per the Order would be divided into two parts, namely, from 9-11-1972 to 10-3-1975 and from 11 3-1975 to 31-7-1975. For the former period, in terms of the Order, the price would be inclusive of Central Excise duty and for the latter period i.e. 11-3-1975 to 31-7-1975, the sale price under the Order would be exclusive of excise duty. Shri Lachman Dev emphasized that the entire period in dispute was covered by Section 4 as it stood prior to its amendment w.e.f.
1-10-1975. During the relevant period, the value of excisable goods of the appellants was to be deter mined with reference to the wholesale cash price concept (corresponding to the concept of valuation under Section 30(A) of the Sea Customs Act, 1878) Shri Lachman Dev stated that so far as the period 9-11-1972 to 10-3-1975 it concerned, the assessable value of the goods as per the provisions of the Order was inclusive of Central Excise duty and no question of making any addition to this value on any account could be made for assessment purposes. In this connection he drew our attention to certain clarificatory instructions issued be the Central Board of Excise and Customs by a circular dated 16-5-1972 where in it had been stipulated inter alia that "controlled prices of aluminium fixed under the aforesaid Order should be the basis for purposes of assessment aluminium to ad valorem duty." His alternative submission was that handling charges per se were not an element includible in the assessable value and, therefore, there was no justification even for loading the assessable value of the goods by handling charges even for the period 11-3-1975 to 31-7-1975. Shri Lachman Dev pointed out that one coil of properzi rod weighed approximately 2 MT and labour had to be engaged to load the same to the lorries or railway wagons to despatch the same to the customers. Such loading of rods into the lorries or railway wagons was the responsibility of the buyers but this job was done by the appellants on behalf of the customers. In some cases, such arrangements were made by customers themselves. It was contended that the appellants were responsible under the Law to pay duty without the addition of these handling charges as these were incurred on behalf of the buyers or allottees of the goods and were separately recovered from them.
5. Shri Jain, the learned S.D.R. submitted that the Order to which a reference had been made by the learned consultant was issued under the Essential Commodities Act to regulate the final sale price of the products. Therefore, he emphasized that the provisions of the Order or any other statutory order could not over-ride the statutory provisions of Central Excises and Salt Act, 1944 which regulated valuation of goods for excise purposes. He further stated that the appellants' case was governed by the unamended Section 4 and Section 4(1 )(a) provided that if in a particular case the wholesale cash price for an article was not known or available at the factory gate then the same could be determined with reference to the nearest place where market for such goods existed. In the case of the appellants, the nearest point of delivery was not the factory gate but the railway yard or transport head where the goods were finally loaded for onward despatch to the ultimate tryer. There was, therefore, nothing illegal on the part of the lower authourtise in including the handling charges incurred by them for making the got deliverable at the nearest point from the factory gate in the context of Section 4(1)(a) of the Act. So far as the reference made by the learned consultant to the Board's letter is concerned, Shri Jain submitted that this letter was in the nature of an internal communication between the Central Board of Excise and Customs and its subordinate field formations. In any event, instructions contained in the said letter could not be called to aid by the appellants as these were in conflict with the provisions of the statute. Shri Jain,' therefore, submitted that the lower authorities were well within their legal rights to add the cost of such charges for arriving at the assessable value of the goods and that the appeal deserved to be rejected.
6. We have heard both sides. It is not in dispute that between 9-11-1972 and 10-3-1973, the controlled price of the properzi rods, in terms of the Aluminium (Control) Order, 1970, was inclusive of excise duty. In terms of the Explanation to the unamended Section 4 of the Central Excises and Salt Act, 1944, the assessable value has to be determined by eliminating the quantum of duty from the cum duty price.
The controlled price, per se, cannot be the assessable value in the absence of a provision analogous to Clause (ii) of the proviso to the amended Section 4. Re-imbursement of any expenditure incurred over and above the controlled price, for and on behalf of the purchaser, is not part of the price of the goods although it may form part of the total consideration for the contract between the parties either express or implied. "Handling charges", for example, are expenditure that, necessarily, have to be borne by the purchaser, but, by virtue of an implied or express agreement between the parties, is incurred by the manufacturer/seller, in the first instance, imbursed to him by the buyer. Nor does it appear to have been statutorily included within the controlled price. On the contrary, the controlled price was exclusive of transportation charges or insurance charges, if any.
7. The question that arises, inevitably, is if "handling charges" are not included within "transportation charges". "Transportation" is the act of removal as well as the means of transport. Can it be said that the expression "transportation charges" mean the charges incurred for the means of transport only and not the entire act and process of removal that may include the expenditure that may be incurred for loading and unloading. This, however, is a question that need not detain us, for, in the words of the Supreme Court in 1983 E.L.T. 1896 (Union of India v. Bombay Tyre International "26. Accordingly, we hold that pursuant to the old S. 4(a), the value of an excisable article for the purpose of excise levy should be taken to be the price at which the excisable article is sold by the assessee at the time and place of removal...
27. Where the excisable article is not sold in wholesale at the place of removal, that is, at the factory gate, but is sold in the wholesale trade at a place outside the factory gate, the value should be determined as the price at which the excisable article is sold at such place, after deducting there from the cost of transportation of the excisable article from the factory gate to such place." 8. The maximum price at which the excisable goods are sold at the place of removal is ascertainable in the facts and circumstances of this case and that is the controlled price which is inclusive of excise duty but exclusive of the cost of transportation. Once this is so, there is no question of adding anything to it, be it transportation charges or handling charges. Only the element of duty included in such controlled price has to be deducted from to arrive at the assessable value.
Accordingly, for the period between 11-3-1975 and 31-7-1975, the controlled price itself, being exclusive of excise duty, is the assessable value.
9. In view of our above observations the appeal succeeds and the matter is remanded to the Collector (Appeals) for re-determination of the assessable value in the light of these observations.