- (1.) Shree Pipes Limited, the petitioner, is a limited liability company incorporated under the Companies Act, 1956 and for the sake of brevity it shall, hereinafter, be called as the assessee. It is engaged in the business of manufacture and sale of A.C. Pressure Pipes and A.C. Couplings and it is duly licensed assessee under the Central Excise & Salt Act, 1944 (for short, the Act). Upto May 31, 1990, the assessee also used to file list of goods for approval of the Proper Officer under Rule 173-B of the Central Excise Rules, 1944 (for short, the Rules) and was not making any deductions of the amount of collection charges and interest on the receivables from the assessable value for the purpose of excise duty, but according to the assessee it realised its mistake and thought that under law it was also entitled to deduct the value of expenses liable to be incurred subsequent to the date of removal and the collection charges and interest on receivables and therefore it filed various fresh revised price lists on and from June 1, 1990 with respect to the different supply contract/supply orders and they were approved and the details are as under : (i) The first fresh list was filed on June 1, 1990 with respect to different supply contracts/supply orders and the Asstt. Collector, Central Excise under his order dated July 30,1990 under Rule 9-B of the Rules approved the price list provisionally in respect of 22 different supply contracts/supply orders. In the price list submitted by the assessee deduction at the rate of 9% on account of interest on receivables and collection charges was also claimed under Sec. 4(1) of the Act for the purpose of payment of excise duty. The assessee was allowed clearance of excisable goods on the basis of the price list determined as aforesaid after providing for the deductions subject to their furnishing bond B-13 for the amount of duty involved and security for an amount equivalent to 25% of the Bond amount; (ii) Another price list effective from August 10, 1990 as per supply order dated August 1, 1990 of M/s. Shiva Enterprises Solan for the supply of pipes of various diameters, detailed in para 12 of the writ petition, was submitted and it was entered in the Divisional Office at No. 2262/90-91. (iii) Another price list effect from August 9, 1990 for supply of asbestos cement pressure pipes of different diameters and class to Himachal Pradesh Irrigation and Public Health Department as per supply order No.IPH-SP-AC Pipes 90/5697-5701 and 5702-06 dated July 18, 1990 was submitted to the Superintendent, Central Excise and Customs, Bhilwara. In both the price lists No. (ii) and (iii) the assessee claimed deductions on account of interest on receivables and collection charges at the rate of 9.5% and deduction in respect of average freight and excise duty. After submission of the aforesaid two price lists a show cause notice No. V (68)PL/131/86/Pt. 4980 dated September 28, 1990 was received from the Asstt. Collector Central Excise, Ajmer by the Assessee whereby the assessee was called upon to show cause as to why the aforesaid price lists No. 2261/90-91, and 2262/90-91 may not be approved. In the aforesaid show cause notice is was also stated that the deductions as claimed by the assessee on account of interest on receivables and collection charges are not permissible to them inasmuch as for the supply order dated August 2, 1990 of M/s. Shiv Enterprises Solan the assessee has received the prices of the total supply in advance and as per the terms and condition No. 2 of the supply order of the Himachal Pradesh Irrigation and Public Health Department dated July 18, 1990, the assessee is to receive 90% payment against the despatched document and inspection note on arrival of the consignment at the destination with the transporter and balance 10% within 30 days from the date of receipt of the material. It was further mentioned that in both the cases the assessee would not have to bear the interest on receivables and collection charges. It was also stated that deduction on account of interest on receivable and collection charges is not permissible under Section 4 of the Central Excise and Salt Act, 1944.
(2.) The assessee in between the period June 26th, 1990 to November 15,1990, in respect of different contracts entered into by it had submitted 10 different price lists to the Central Excise Division, Ajmer wherein also the assessee had claimed deduction on account of interest on receivables and collection charges from the excisable value : for the purpose of charging excise duty on the ground as aforesaid. According to the petitioner, the said price list was submitted on the same principle on which the price lists were submitted earlier to July 30, 1990 and provisional approval under Rule 9-B was made on July 30, 1990. But the Asstt. Collector under his order dated November 27, 1990 without any show cause notice and without passing final order in respect of approval of the price list directed the petitioner to effect clearance in respect thereof only at the price contracted less excise duty, freight, insurance and cost of rubber ring and thus without deciding the issue finally disallowed deduction on account of the interest on receivables and collection charges and subsequent to the communication dated November 27, 1990, the assessee has been served with six different show cause notices dated November 26, 1990 covering various price lists effective from the dates given in para 19 of the writ petition. According to the assessee the price lists submitted by it for the aforesaid period did not fall within any of the categories referred to under rule 126(i) to (ii) and the assessee is entitled to make clearance without prior approval of the Proper Officer.
(3.) The case of the assessee is that the deduction even in respect of freight are calculated on the basis of previous average. Thus, the deduction in this respect is calculated on the basis of average charges incurred during the preceding year. The assessee has therefore challenged the aforesaid notice to show cause and the ground of challenge is that in view of the decision of the Apex Court in the case of Asstt. Collector of Central Excise and others Vs. Madras Rubber Factory Ltd. and others., 1987 27 ELT 553 (for short, MRF case) and in view of Union of India and others Vs. Bombay Tyre International Ltd. etc., 1983 14 ELT 1896 (for short, Bombay Tyre case) interest on receivables and collection charges, expenses incurred subsequent to sale, removal or delivery of goods are permissible deductions under Sec. 4 of the Act. The challenge to the show cause notice is also on the ground that the Central Board of Excise & Customs under Sec. 37-B of the Act has issued instructions that in view of the decision of the Supreme Court and the matter is still pending in the Supreme Court, the interest on receivables and collection charges should be deducted from the value of the goods and those instructions are statutory in nature and are binding on the assessing authority.;