COLLECTOR OF CENTRAL EXCISE Vs. TAPARIA TOOLS LTD.

JUDGEMENT

(1.) AN interesting question of law arises in these appeals. The question is whether there can be different values for the same goods manufactured when they are sold in wholesale at the factory gate and at depots to different classes of buyers as provided by Section 4 of the Central Excise Act, 1944, hereinafter referred to the Act. The transactions involved in these appeals relate to periods prior to the amendment of the Section by Act 33 of 1996 which came into force with effect from 28 -9 -1996.

(2.) THESE appeals came up before a bench of two Members. Learned Counsel representing the respondents and learned Departmental representative contended that there is apparent conflict in the decisions of two Members benches regarding the true scope and ambit of Section 4 of the Act. In order to have a closer scrutiny of those decisions and the scope and effect of Section 4 of the Act, these appeals were placed before a larger Bench of three Members. This is how they came before us. Arguments advanced by learned Departmental Representative and learned Counsel were heard in detail. We are disposing of the appeals.

(3.) FOR a proper understanding of the actual issue raised, it is necessary to refer to the facts. Since facts in these appeals are almost similar, except in the case of Taparia Tools which will be referred to hereinbelow we consider it advantageous to state the facts in one case viz. Appeal No. E/907/97 -A, Collector of Central Excise, Chandigarh v. Royal Biscuits Pvt. Ltd. Respondents are engaged in the manufacture of Biscuits assessable to duty under Chapter Heading 1905.11 of the Schedule to Central Excise Tariff Act, 1985. Manufacturer filed price lists in Part I for sale of their produce to independent buyers through their sales depot located in various States. In those lists different prices were shown by allowing different trade discounts for wholesales to dealers from different regions. Manufacturers were selling their produce at factory gate as well to independent buyers and as such normal factory gate price was also available. In such a situation a notice was issued to the manufacturer to show cause why price available at factory gate should not be applied to goods cleared through depot covered by the price lists. Assistant Commissioner, Central Excise, Shimla took the view that normal factory gate price should apply to the clearances effected to wholesale dealers through sales depots and varying trade discounts to wholesale dealers located at different stations are not permissible. He further held that deduction on account of freight where goods are sold in course of wholesale trade at places outside the place of removal is permissible. Aggrieved by this decision of the adjudicating officer, the manufacturer went in appeal before the Commissioner (Appeals). That appeal was allowed by the Commissioner relying on his earlier decision on the issue (the earlier order is the subject matter of Appeal E/265/95 -A taken up by us), taking the view that dealers of different regions are differently placed from each other and are to be treated as different class of buyers. Accordingly, it was taken that prices charged to dealers at sales depots may vary from State to State and varying rates of trade discounts are admissible on sales to dealers of different States on commercial considerations. Maintenance of sales depots and grant of varying rates of trade discount are commercial requirements, according to the appellate authority. This decision of the Commissioner (Appeals) is under attack in this appeal.