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PETITIONER: IDL CHEMICALS LIMITED

       Vs.

RESPONDENT: THE COLLECTOR OF CENTRAL EXCISE

DATE OF JUDGMENT:       09/05/1997

BENCH: SUHAS C. SEN, K.T. THOMAS

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T SEN, J.      The  appellant,  IDL  Chemicals  Limited,  manufactures explosives at  its factory  at Sonaparbat. The raw materials for  explosives  are  obtained  from  diverse  sources.  The finished goods are sold in the following manner:- (i)  Goods which  are sold  to  customers  like  Coal  India      Limited. (ii) Goods  sold to  public sector  companies and Government      undertakings. (iii) Goods  which are sold to ordinary customers who do not      have long term contract. (iv) Goods which  are transferred  from the factory premises      to various  magazines outside the State of Orissa which      ultimately are sold to persons enumerated in categories      (i) and (iii).      There is  no dispute  that the  goods are  sold to Coal India Limited  and Government  undertakings at  a rate  much lower than  the rate  charged for the goods sold to ordinary customers who  do not  have any  long term contract with the appellant.      There is  also no  dispute that  excise duty is paid at the factory gate on the basis of three different prices:- (i)  The price paid by Coal India Limited. (ii) A little  higher price  paid by public sector companies      and Government undertakings. (iii)     Goods sold  to ordinary customers at a much higher           rate.      The ad  valorem duty is imposed separately on the three types of sales made by the appellant. There is no dispute on these sales.      Nearly 50%  of the  goods manufactured by the appellant are not  sold at  the factory  gate, but  are transported to various magazines  outside the  State of  Orissa. From these magazines the  goods  are  ultimately  sold  to  Coal  India Limited,  Government   undertakings  and   also   to   other customers. There  is also  no dispute that bulk of the goods are purchased  by Coal India Limited at a low rate. Ordinary purchasers have to pay a much higher price.      The dispute in this case is about the excise duty which

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has to  be paid at the time of removal of the goods from the appellant’s factory  outside the  State  of  Orissa  to  its magazine.      The  procedure   followed  by   the  appellant  was  to calculate the duty on the basis of the price usually paid by Coal India  Limited. The  appellant used  to execute  a bond under Rule 9-B of the Central Excise Rules, 1944 and pay the duty provisionally  on the  basis of  its own calculation on this basis.  As and when sales ultimately took place, if any higher price  was realised the differential duty was paid by the appellant.  On behalf  of the appellant, it is contended that there  is no  allegation of  any suppression of fact or avoidance of  tax by  the appellant. The appellant following this procedure has from time to time paid whatever duty was payable by it.      It  has   further  been  contended  on  behalf  of  the appellant that the duty is to be paid on the "normal price", as contemplated  by Section  4(1) of the Central Excise Act, 1944. The  "normal price"  is a price at which the goods are usually sold  to the  wholesale dealers. There is no dispute that in  this case  the bulk  of the  goods produced  by the appellant are sold to Coal India Limited. When the goods are not being  sold at  the factory  gate and are being taken to various magazines  all over  the country,  the  question  of determination  of  "normal  price"  of  these  unsold  goods arises. The  "normal price"  in this  case will  have to  be found by  reference to the price at which the goods are sold to Coal  India Limited,  which according  to  the  appellant consumes nearly  90% of the goods produced by the appellant. There is  no reason to calculate normal price to be anything but the  price usually  paid by  Coal India  Limited. It has further  been   contended  that   the  Act   contemplates  a provisional assessment  and final  assessment. The  assessee provisionally paid  taxes when  the goods  were removed from factory gate  to the  godowns and  finally paid the tax when the final assessment was made. The procedure followed by the assessee was accepted and acted upon by the excise authority for a number of years. There was no reason to interfere with this practice.      On behalf  of the respondent it was pointed out that so far as  the sales  to  Coal  India  Limited  and  Government undertakings are  concerned, the  assessee has  filed  price lists at  the time  of removal  of goods at the factory gate and tax  was levied  accordingly. Similarly,  when the goods were sold  to other  customers whatever  price list had been filed by  the assessee was approved and goods had been taxed accordingly. But  when goods  were despatched  to  different consignment agents  in various  parts of  the of the country who stored  the goods  in magazines there, no price list was filed by  the assessee.  At the  time of  removal  from  the factory, the  goods were  not  earmarked  for  sale  to  any particular buyer.  The assessee did not represent that these goods were  meant to  be sold  to Coal  India Limited  or  a Government purchaser  at a  stated price.  No price list was filed by  the appellant  at all.  Since there was nothing to indicate that  the goods were meant to be sold to Coal India Limited or  a Government undertakings the price at which the assessee sold  the goods  to private  buyers at  the time of removal of goods from the factory was treated as the "normal price" of the goods.      We are  of the  view, the  contention of the respondent must  be  upheld.  The  assessee  has  failed  to  make  any declaration as to the price of the goods despatched by it to its various  agents outside  the State. At the point of time of removal  of the goods, the assessee was not in a position

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to say that the goods were meant to be sold to Coal India or any  other  Government  undertaking.  The  duty  had  to  be calculated at  the point of time of removal of the goods. At that point  of time,  the only  way the duty could be levied was by  calculating the  duty on  the basis of sales made to independent customers  and not  a special customer like Coal India. Even  if ultimately and at a much later date from the date of  removal of  the goods, the appellant sold the goods to a  Government Company  or  to  Coal  India  Limited,  the liability to  pay duty  at the time of removal of goods from the place  of manufacture  will not  be altered. Rule 9-A of the Central  Excise Rules  lays down that no excisable goods shall be  removed from  any place  of manufacture  until the excise duty  leviable thereon  has been  paid. Rule 9-A also lays down  that the  rate of duty shall be the rate in force on the  date of  actual removal  of goods  from the factory. There is a special rule for warehousing the goods which does not apply to this case. The appellant did not file any price list in connection with these goods which were being sent to the consignment  agents. The assessee was unable to make any statement that  the goods  were meant for sale to Coal India Limited or  for any  Government Company.  The Excise Officer was right  in calculating  the price  which would  have been payable by  an ordinary  customer as  the "normal  price" of these goods.      The appeal,  therefore, fails  and is  dismissed. There will be no order as to costs.