D N KOHLI COLLECTOR OF CENTRAL EXCISE BOMBAY Vs. KRISHNA SILICATE AND GLASS WORKS

JUDGEMENT

(1.) KRISHNA Silicate and Glass Works Ltd. (hereinafter referred to as 'the Company') carried on business of manufacturing glass bottles of various sizes. Its factory was situate at Thana. In or about the year 1961 as a result of introduction of Item No. 23A in the First Schedule annexed to the Central Excises and Salt Act, 1944 (hereinafter referred to as 'the Act') glass manufacturers were liable to pay excise duty. Item No. 23A is as under : -

(2.) THE procedure followed by the Company and the Excise Department for levy and collection of excise duty was as under : The year was divided into four quarters beginning with 1st January, 1st April, 1st July and 1st October. The Company used to submit to the Excise Department price lists containing the prices proposed to be charged to the customers during the ensuing quarter. Whenever the goods were required to be removed from the factory the Company used to submit returns in AR 1 form prescribed under the Central Excise Rules, 1944 (hereinafter referred to as 'the Rules'). Pending the verification and determination of the price for the purpose of excise duty on the AR 1 form an assessment was made which was described as 'Provisional Assessment' and after making a debit entry in the account current maintained as required by the second proviso to Rule 9 the goods were allowed to be cleared by issuance of a gate pass. Such account was settled from time to time.

(3.) IN the present appeal we are concerned with the demand made by the Department for the quarter beginning from April 1, 1966 and ending on June 30, 1967. By the notice of demand dated September 2, 1967 the Superintendent, Central Excise, Bombay, informed the Company that the assessable value approved for glassware (bottles) manufactured by the Company for the quarters ending June 1966, September 1966, December 1966, March 1967 and June 1967 were shown in the annexure to the said notice. By this notice the Company was required to represent its case to the Assistant Collector of Central Excise in case it felt aggrieved by the decision. Thereafter by the notices of demand purported to be issued under Rule 9 -B of the Rules dated September 23, September 26, October 17, October 25, and November 17, 1967 the company was called upon to pay the various amounts therein mentioned by way of differential duty payable for the five quarters beginning from April 1, 1966 and ending on June 30, 1967. On receipt of these notices three representations were made by the Company to the Assistant Collector on October 3, November 24 and November 25, 1967 for the said five periods wherein it inter alia stated that the assessable value for determination of the excise duty was approved by the Department after taking into consideration the amounts spent by the Company as transport and service charges; that such charges had no relation with the price of the goods in question and that the inclusion of such transport and service charges in the assessable value of the goods was totally unwarranted and arbitrary and beyond jurisdiction. The Company also requested for a personal hearing to be granted by the Assistant Collector. Such hearing was granted on May 27, 1968 and representations were ultimately disposed of by the Assistant Collector by his order dated July 20, 1968. The Assistant Collector rejected the contention of the Company that the notices of demand were time -barred under Rule 10 observing that they wee governed by Rule 10A. He also pointed out that the statement in the notices of demand that they were issued under Rule 9 -B was untenable but such reference to Rule 9 -B did not affect the validity or legality of the demand. After referring to the invoices that were submitted by the Company, one set known as K.B. invoices and the other set known as K.P.T. invoices, and after referring to the prices at which similar bottles were sold by two other concerns, namely, New Era Traders and Vitrum Glass Works, he took the view that the service charges were part and parcel of the total price paid by the customers and that no attempt was made to give the exact nature or details of the so -called service charges. He rejected the contention of the Company that service charges were post -factory expenses and were not liable to be included in the assessable value. Substantially on these grounds the representations made by the Company were rejected by him. An appeal preferred by the Company was disposed of by the Collector of Central Excise by his order dated May 12, 1970. The Collector took the view that the issuance of the notices of demand under a wrong Rule, namely, Rule 9 -B has not misled the Company; that there was non -disclosure on the part of the Company of material information in respect of the so -called service charges which entitled the Department to issue the impugned notices of demand. He also took the view that non -disclosure by the Company in respect of recovery of service charges was in fact suppression of material information and such suppression could not be regarded as mis -statement. According to him if a material information was not made known to the Department the case was covered by Rule 10 -A and the provisions of Rule 10 were not attracted. He also confirmed the finding of the Assistant Collector that the so -called service charges formed part and parcel of the price structure and were not post delivery charges. He rejected the contention of the Company that it was not given a reasonable opportunity to know the evidence relief upon. He took the view that the comparison of the prices of the Company's articles with those of other manufacturers made by the Assistant Collector was not only apt but quite necessary as the comparison was in respect of articles of identical specifications supplied to identical customers. On these findings the appeal preferred by the Company was rejected and it is thereafter that Company filed the present petition on July 27, 1970.