CACHET PHARMACEUTICAL LTD. Vs. CCE, JAIPUR

JUDGEMENT

(1.) APPELLANTS are manufacturers of patent and proprietary medicines. They do so from Bhiwani located near Bombay,k Gujrat and Bhiwadi (Rajasthan). They were liable to pay excise duty on the normal price prevailing at the factory gate. As the good were being sold from depots, which handled goods from more than one factory, they averaged the deductible elements of costs like freight, octroi and other taxes and claimed assessment based on the normal price arrived at after deduction of these elements on average basis from the depot price. The impugned order held that such deduction on average basis is not permissible and that factorywise particulars of deductible expenses should be made available. On account of failure to do the same, the order denied deduction claimed to the tune of about Rs.80 Lakhs and made duty demand.

(2.) DURING the hearing of the appeal today, Learned Counsel representing the appellant submitted that deduction on average basis for several factories is a commonly accepted method for the purpose of determining assessable value for payment of central excise duty. He submitted that such a method has been approved by the Apex Court in the case of M.R.F. Ltd. He submitted that Board has issued instructions vide Circular No.136/47/95 -CX dated 12.7.95 stating that deduction of freight on average basis should be accepted while determining the normal price under section 4(1)(a) of the Central Excise Act. Learned Counsel pointed out that the appellant has produced C.A. certificates fro each of the factory certifying deduction to be made based on actual costs incurred. Learned Counsel submitted that the impugned orders, being contrary to the decision of the Apex Court and also the guidelines contained in the circular of the Board, should be set aside and the appeal allowed.

(3.) VALUATION of the goods for assessment of central excise duty was required to be done in terms of Section 4(1)(a) of the Central Excise Act during the relevant period. That value was the normal price at which goods are sold on wholesale basis at the factory gate. Therefore, the element of deduction, namely, freight, taxes etc. as claimed by the appellant were clearly permissible in law. Claim of such deduction on average basis has also been approved by the Apex Court in its decision inn the case of M.R.F. Ltd. In these circumstances, it has to be held that there is no legal basis to the denial of deduction claimed by the appellant on average basis. During the arguments, Learned Departmental Representative pointed out that from the order of the Commissioner it would appear that part of the deduction related to non -excisable goods also. He referred in particular, to observation to this effect in the last para of the order. Learned Counsel for the appellant, however, pointed out that the entire record of the case showed that there was no dispute that the deduction claimed related only to excisable goods and not to any non -excisable goods. He therefore, submitted that the observation of the Commissioner that the deduction claimed was also in respect of expenses incurred on non -excisable goods has no basis. Learned Departmental Representative has not pointed out any material in the record to suggest that the observation of the Commissioner is based on records. Therefore, it can not be accepted as having any factual basis.