1. This was originally filed as a revision application before the Government of India and on transfer to this Tribunal is being treated as an appeal.
2. The appellants carry on the business of manufacture of aerated waters at their 1 factory at Madras. This item was included in the First Schedule w.e.f. 1-3-1970. The rate of duty depended on the value.
The appellants have their own transport system for delivery of the goods at the site/door of their customers. They charged in addition to the price of the aerated waters, freight charges at Rs. 2.85 per crate during the period 16-8-1974 to 16-8-1975. The appellants were directed by the Department to declare the assessable value of the product including such freight charges.
3. The Supreme Court in the case of Voltas Ltd. held that normal value for assessment has to be fixed on the basis of price for delivery at the factory gate thereby eliminating freight, octroi and other charges involved in the transport of the articles.
4. On 1-4-1976, the appellants filed a refund claim for Rs. 5,27,881.70. This was on account of the duty paid on freight charges from 16-8-1974 to 16-8-1975. The Assistant Collector issued a show cause notice and passed order on 22-12-1976 rejecting the refund claim.
The Appellate Collector, Madras, confirmed the findings. Hence the revision application, now being treated as an appeal.
5. Shri P.S. Bedi, Consultant, submitted that the appellants were delivering the goods to the customers at the places of their business and the price declared was the destination price. According to him the refund claim ought to have been allowed. The appellants also placed reliance on the order of the Central Board of Revenue in the case of Bata Shoe Company where it was held that only the discount which was straightaway allowed to the distributors towards freight charges incurred by them on ensuring supply to customers outside the factory gate was admissible (as deduction). The appellants submitted that their refund claim was based on Chartered Accountant's certificate which clearly indicated the post-manufacturing expenses incurred.
6. On behalf of the Department, Shri A.K. Jain, Senior Departmental Representative, pointed out that there was no appeal against the approval of the price list nor the appellants seek any provisional assessment. He submitted that the duty was not paid under any mis-construction and should be treated as voluntary payment. He said that the order of the Appellate Collector did not call for any modification.
7. The Appellate Collector in the course of his order agreed that the freight charges herein were post-manufacturing expenses and should be allowed in view of the pronouncement of the Supreme Court. But he rejected the claim because the findings did not disclose the actual transport charges. He held that the invoices or price lists did not spelt out specifically the actual transport charges. We are unable to accept this view of the Department. The approval of the price list has been considered in the light of the protests made by the appellants.
When the Chartered Accountant's certificate disclosed these items as freight charges the appellants should have been called upon to establish the same. The appellants have stated in reply to the show cause notice that the refund claim filed on 13-3-1976 was in respect of their clearances on and from 31-3-1975 and that the claims would be well within time. In any event, the Supreme Court has in their recent judgment in Union of India and Ors. etc. etc. v. Bombay Tyre International Limited etc. etc. [1983 (14) E.L.T. 18% (SC)] specified the items of expenditure to be excluded from the assessable value. The learned Consultant for the appellants cited also a ruling of Calcutta High Court reported in 1983 (12) E.L.T. 126 (East Anglia Plastics India Ltd. v. Collector of Central Excise, Calcutta). In that decision it was held that if the calculation or determination of the value on the basis of the price lists was contrary to Section 4(a) of the Act, such calculation was invalid. In the present case, since the appellants have been contending right from the beginning that the charges were only equalised freight and should be deducted, the impugned order cannot be sustained.
8. For the reasons stated above, we accept this appeal, set aside the impugned order of the Appellate Collector and remit the case for allowing the refund after excluding the transport charges from the assessable value of the product in the light of the Supreme Court decision in Bombay Tyre International case cited above.