INDIAN OXYGEN LTD. versus COLLECTOR OF CENTRAL EXCISE.

Citation: [1988] SUPP. 1 S.C.R. 687 · Decided: 28-07-1988 · Supreme Court of India · Bench: SABYASACHI MUKHERJI · Disposal: Disposed off

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Judgment (excerpt)

INDIAN OXYGEN LTD. 
v. 
COLLECTOR OF CENTRAL EXCISE. 
JULY 28, 1988 
[SABYASACHI MUKHARJI AND S. RANGANATHAN, JJ.) 
Central Excises and Salt Act, 1944.: Section 4--Valuation of 
excisable goods-When ex-factory price is ascertainable, assessment to 
be made on that basis only-if ex-factory price is not ascertainable and 
assessment to be made ex-depots/service centres, deductions may be 
claimed towards charges for transportation, delivery and collection, and 
charges for loading within the premises, on the basis of actual evidence. 
The appellant has been manufacturing compressed oxygen and 
dissolved acetylene~ falling under tariff item No. l4H of the First 
Schedule to the Act. These items were sold to Government undertakings 
at the rates determined by DGS&D. In respect of other buyers the 
appellant charges prices on slab basis which is related to quantitative 
discount. These prices were found to be much more than the prices 
indicated in the approved price list. The appellant did not furnish 
quantities of the products sold from its depots/service centres. Apart 
from the declared price, the appellant charged delivery and collection 
charges, cylinder deposit and rentals. 
The appellant explained 'that the difference in prices was due .to 
special delivery and collection charges incurred for transporting the 
goods from the place of manufacture to the depot from where it was 
sold. The appellant's claim for abatements of account of freight and 
handling charges was not accepted as no evidence was ::iroduced for the 
same. In respect of the price lists submitted by the appellant for 
approval, show cause notices were issued. Tbe appellant replied that in 
the past, under similar circumstances the claim for abatement had been 
upheld by the-Department and therefore, there was no reason to deviate 
from the previous practice. The Assistant Collector rejected the plea 
and approved the price list after disallowing the abatement on account 
of freight and handling charges. The appellant preferred an appeal 
before the Collector of Central Excise (Appeals) which was dismissed. 
Thereafter both the appellant and the Assistant Collector filed separate 
appeals before the Customs Excise and Gold (Control) Appellate 
Tribunal. 
687 
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B 
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D 
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H 
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688 
SUPREME COURT REPORTS 
. [1988] Supp. 1 S.C.R. 
The Tribunal emphasised that the ex-factory prices were ascer-
tainable and there was no scope of deduction from that price. However-
it directed that if ex-factory prices were not ascertainable and the goods 
were to be assessed ex-depot, then it would be for the appellant to claim 
on the basis of actual evidence, and remanded the case to the Assistant 
Collector to retix the assessable value accordingly. These appeals under 
. section 35L(b) of the Act are against the Tribunal's decision. 
Disposing of these appeals, 
HELD: 1. The cost of transportation from factory to the depot 
cannot normally be included in computation of the value under Section 
4(l)(a) read with section 4(4)(d)(i) of the Act. Where the wholesale price 
is ascertainable at the factory gate, the qnestion of transportation 
charges becomes entirely irrelevant. The cost of transportation from 
the factory gate to the place of delivery and transit expenses were not to 
be added to the wholesale price at factory gate for purpose of duty 
under the Act. It is clear from section 4 that the delivery and collection 
charges have nothing to do with the manufacture as they are for deli-
very of the tilled cylinders and collection of the empty cylinders. These 
charges have to be excluded from the assessable value. Insofar as the . 
loading charges incurred for loading the goods within the factory are 
concerned, they 2re to be included in the assessable value, irrespective 
of who has paid for the same, bot the loading expenses incurred outside 
the factory gate are excludihle. Duty of excise is a tax on the 
mannfactnre. not a tax on the profits made hy a dealer on transpor-
tation. [690F-H; 691AI 
2. In the instant case, there is a clear finding that the ex-factory 
price was ascertainable. If once that is the position that should be the 
basis upon which the value is to be determined, the other expenses, 
costs or charges must be excluded. [6938] 
Vnion of1ndia & Ors. etc. etc. v. Bombay Tyre International Ltd . 
.etc. etc., I 1984 I I SCR 347 referred to. 
[This Court observed that the Tribunal's order stood modified 
accordingly

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