CASTROL INDIA LTD. Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) APPEAL No. 385/2006 is against a demand of differential duty of Rs. 2,65,484/ - for the calendar year 2001, while the other appeal is against a demand of differential duty of Rs. 13,98,850/ - for the calendar year 2003. The present applications are for waiver of pre -deposit and stay of recovery in respect of the duty amounts. After examining the records and hearing both sides, we find that the appellants, during the period of dispute, were engaged in the manufacture of "lubricating oils" of various grades and marketing the same through depots located in different parts of the country. Products of some grades were assessed to duty of excise on MRP basis, while a few other grades were assessed to duty under Section 4 of the Central Excise Act. These goods were stock -transferred from the appellant -unit to their depots, from where the goods were sold to customers at discounted prices. Both quantity discount and cash discount were allowed to such customers as shown in the relevant invoices. The practice of the assessee was to adopt the rate of discount for the previous calendar year for the purpose of determining the assessable value of the goods sold from depots in a given calendar year and, accordingly, the assessments were provisional. The original authority, while finalizing the assessmerits, rejected the assessee's claim for abatement of discounts on equalized basis. It also rejected their claim for similar abatement of turnover tax from the assessable value. Accordingly, the assessments were finalized for 2001 and 2003 and the aforesaid amounts of differential duty were worked out for recovery. This decision was upheld by learned Commissioner (Appeals). Hence the above appeals and applications before us.

(2.) AFTER hearing both sides, we find that, in the impugned order, there is a finding to the effect that the assessee could have alternatively paid duty on the basis of "normal transaction value" of the goods at factory gate. Today, the authorized representative of the company has proposed to compute the assessable value on this basis and has claimed to establish that, on this basis, no amount of duty is payable for 2003 and that they will be entitled to refund for that period. It is submitted that, for 2001, the amount of duty payable on the basis of "normal transaction value" would be Rs. 2.81 lakhs. However, these submissions are not supported by any records duly verified by the department or duly certified by auditor. Hence, at this stage, we are not inclined to accept the above claim of the appellants. The case would fall back upon the question whether the claim of the appellants for abatement, from assessable value, of discounts and turnover tax on equalized basis is sustainable on the facts of the case. Ld. representative of the company has relied on the Apex Court's judgment in the case of Bombay Tyre International 1984 (17) E.L.T. 329 (S.C.) and certain decisions of the Tribunal, in support of his contention that deduction of discounts on equalized basis is permissible in the determination of assessable value of the goods. We find that, in the cases cited before us, what was allowed was deduction of equalized freight from assessable value of goods stock -transferred from factory to depots situated in different parts of the country. Prima facie, the principle adopted in respect of equalized freight cannot be applied to discounts or turnover tax. It is also pertinent to note that turnover tax varies from State to State and the same is not recoverable from the customer. We are at a loss to understand the logic of equalization of this tax. In the circumstances, we have to hold that the appellants have not made out prima facie case against the demand of duty. They have not pleaded financial hardships either. Nevertheless, in a lenient approach, we are asking them to pre -deposit only a part of the duty demand. Accordingly, the appellants shall deposit 50% of the respective duty amounts within 4 weeks. Report compliance on 26 -9 -2006.