COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH v. M-S SUPREME FABRICS LTD

Citation: [2007] 13 S.C.R. 468

Court: Supreme Court of India

Bench: S.H. KAPADIA, B. SUDERSHAN REDDY

Case summary

COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH v. M-S SUPREME FABRICS LTD.pdf

Judgment text

COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH v. MIS SUPREivffi FABRICS LTD. DECEMBER 12, 2007 [S. H. KAPADIA AND B. SUDERSHAN REDDY, JJ. ] Central Excise Act, 1944: s. 3(4)(d)(ii)-Loading charges incurredwhile effecting clearance from factory gate-Assessee claiming deduction/abatement from assessable value-HELD: Tribunal rightly heldthat as demand ofduty on 'loading charges' arose subsequently and the amounts were total consideration collected as loading charges, the same should be taken as cum-duty prices and demand to be calculated after allowing abatement ofexcise duty payable. Srichakra Tyres Ltd v. Collector ofCentral Excise, Masdras, (1991) 108ELT361 (Tribunal), followed. CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2873 of 2002. From the Final Order No. 16/2002-A dated 8. 1. 2002 passed by the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. E/1372 2001-A with E Cross/170/2001-A. R. S. Shukla, Vikas Sharma and Rashmi Malhotra (for B.

Krishna Prasad) for the Appellant. The following Order ofthe Court was delivered: ORDER None appears on behalf ofthe sole respondent. '"' The issue involved in this case is whether accruing, loading charges collected by the assessee were liable to be treated as cum-duty price and COMMISSIONER OF CENTRAL EXCISE, 469 CHANDIGARH v. MIS SUPREME FABRICS LTD. if so whether the Department was obliged to make the demand after j allowing abatement for central excise duty payable on such loading charges [see para 2(ii) ofthe civil appeal paper book]. Mis Supreme Fabrics Ltd. , Ludhiana claimed deduction from assessable value on account of loading charges incurred while effecting clearances from the factory gate. The AO held that deduction was not admissible in terms ofSection 4(4)(d)(ii) of Central Excise Act, 1944. The AO took the view that the amount ofloading charges was includible in the assessable value.

The AO took the view that the assessee had omitted to include such loading charges in the assessable value and, therefore, it was not entitled to deduction/ abatement on account ofthe said charges. Aggrieved by the decision, the assessee carried the matter in appeal to the Commissioner (A). It was held that the said loading charges were includible in the assessable value, however, following the judgment ofthe Tribunal in the case in Srichakra Tyres Ltd v. Collector ofCentral Excise, Madras, (1999) 108 E. L. T. 361(Tribunal), the assessee was entitled to abatement. We quote hereinbelow the relevant paragraph from the order ofthe Commissioner (A), which reads as under: "Regarding calculation of assessable value I agree with the appellants that value should be treated as cum-duty-price. This issue has been decided by CEGAT-LARGER BENCH.

That under Section 4(4)(d)(ii) of CEA 1944-Excise duty held payable subsequently is to be abated from total sale price realization by treating it as cum-duty price for determination ofthe assessable value and quantum ofduty demand payable. [Srichakra Tyres Ltd & Ors. v. CCE (1999(32)RLT-I(CEGAT)]. As in this case demand of duty on 'loading charges' has arisen subsequently and these amounts are total consideration collected as loading charges should be taken as cum-duty prices and deinand has to be calculated after -/ allowing abatement of C. Ex. duty payable. " The said order ofthe Commissioner came to be upheld by the Tribunal Hence, the Department has come to this Court by way ofcivil appeal. Shri R. Shukla, learned counsel appearing on behalf of the Department, stated that the loading charges collected by the assessee was part of cost ofproduction and, therefore, the assessee was not entitled to the benefit of abatement.

It was further contended on behalfof the Department that the'Department had not accepted the judgment ofthe Tribunal in the case of Srichakra Tyres Ltd. (supra) and that the Department had preferred Civil Appeal Nos. 5862-5863/99 against the judgment ofthe Tribunal in Srichakra Tyres Ltd. (supra). According to .!. the learned counsel, the matter is pending before this Court. According to the learned counsel the law laid down by the Tribunal in the judgment in Srichakra Tyres Ltd. (supra) is not correct. We find no merit in the above arguments. At the outset, it may be stated that there is no averment in the grounds of appeal filed by the Department before the Tribunal that the loading constituted cost of production. Secondly, we find from the record that the Department's Civil Appeal Nos. 5862-63 of 1999, which has been referred to in the synopsis at page 'D' have been dismissed by three-Judge Bench ohhis Court vide Order dated 26. 2.

2002, which are reproduce hereinbelow: "After hearing the learned counsel for the parties on the facts ofthis case, we are ofthe opinion that the stand ofthe respondents is correct. Various calculations have been made and we have taken into consideration the subsequentprice which has been approved by the Department with effect from 8. 10. 1992 and it clearly appears to us that the revision of the price was cum-duty and, I therefore, the element of duty in the increased amount had to be deducted. The appeals are dismissed. No costs. " (emphasis supplied) For the aforestated reasons, there is no merit in the civil appeal and the same is accordingly dismissed with no order as to costs. RP. Appeal dismissed.