Gopal Glass Works Limited Vs Union of India and Ors.

¶1

 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
 CIVIL APPELLATE JURISDICTION

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WRIT PETITION NO.7370 OF 2007
 Gopal Glass Works Limited )
 a Company registered under the )
 Companies Act, 1956 and having its)
 Registered office at 182, Gagan )
 Vihar, Khanpur, Ahmedabad-380 001 )..Petitioners
 Versus
 (1) Union of India )
 through the Secretary )
 Ministry of Finance, )
 Department of Revenue, North )
 Block, New Delhi-110 001. )
 (2) The Settlement Commission )
 Customs & Central Excise )
 Utpad Shulk Bhavan, )
 Bandra-Kurla Complex, )
 Bandra(East), Mumbai-400 051 )
 (3) Additional Director General )
 Directorate General of Central)
 Excise Intelligence, )
 Ahmedabad Zonal Unit, )
 1st Floor, Preema Chambers )
 Near Mithakali Six Roads, )
 Ellisbridge P.O. )
 Ahmedabad-380 006. )
 (4) The Commissioner of Central )
 Excise, Ahmedabad-III, )
 Near All India Radio, )
 Navrangpura, )
 Ahmedabad-380 009. )..Respondents
 ----

¶3

 Mr.V.Sridharan with Mr.Prakash Shah i/by PDS Legal
 for the petitioners.

¶4

 Mr.M.I.Sethna, Senior Advocate with
 Mrs.S.V.Bharucha, Mr.R.Ashokan and Mr.H.P.Chaturvedi
 for the respondents.

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 ----

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Coram : F.I.Rebello &
 R.S.Mohite,JJ

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 Date : 13.03.2008.

¶8

 : 2 :

¶9

Judgment :- ( Per : R.S.Mohite,J)

¶10

 1. Heard both sides. Rule, made returnable
 forthwith.

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 2. This Writ petition is filed by Gopal Glass Works
 Limited (hereinafter referred to as the
 "petitioners") seeking to quash and set aside the
 order dated 6.6.2007 passed by the respondent no.2
 i.e. Settlement Commission, Customs & Central
 Excise.

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 3. Counsel appearing for the petitioners states
 that the only grievance that they have against the
 impugned order is that the Settlement Commission,
 without considering all the relevant documents
 pertaining to their claim regarding deduction of
 freight, which documents had been seized by the
 Excise Authorities and were in their possession,
 gave a finding that it was not possible to accept
 any deduction towards freight from the assessable
 value as claimed by the petitioners.

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 4. The finding of the Settlement Commission as

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 regards the petitioners’ claim regarding freight is
 contained in paragraph 9.2 of the impugned order and
 reads as follows :-

¶15

 : 3 :

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 9.2 Another major claim is regarding the
 freight. Here also, we find that the
 goods, were sold at the factory gate.
 Secondly, the documents indicated that the
 goods were sold on freight to pay basis.
 In other words the buyers were to pay the
 same. Under these circumstances, it is
 clear that there are no documentary and
 other evidence to indicate that the
 applicants had incurred any amounts
 towards freight of their finished
 products. They have not been able to
 bring out any evidence from their buyers
 to prove that the freight was initially
 paid by them. Therefore, we are unable to
 accept any deduction towards freight from
 the assessable value."

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 5. The brief facts of the case were as under :-

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 (a) The petitioners were engaged inter alia in the
 manufacturing of glass sheets and on 29.4.2004,
 based on investigation carried out by the officers
 of the Directorate General of Central Excise, the
 petitioners were issued a show cause notice
 demanding central excise duty of Rs.3,59,85,562/-
 for the period May-1999 to August-2003 on the ground
 of under valuation of goods.

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 (b) On 5.5.2005 the petitioners filed an application
 before the Settlement Commission for settling the
 case made out in the show cause notice dated
 29.4.2004.

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 (c) On 25.10.2005 the Settlement Commission admitted
 the petitioners’ application for settlement.

¶21

 : 4 :

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 (d) On 18.1.2006 the petitioners filed a compilation
 and also furnished comprehensive submissions in
 respect of various deductions claimed by them.

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 (e) On 16.3.2006 the Settlement Commission passed an
 interim order directing the petitioners to furnish
 calculation on the basis of the method adopted by
 respondent no.3 and to file an affidavit on three
 aspects as set out in paragraph-12.3 of the order.

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 (f) On 9.5.2006 the petitioners filed a statement
 showing the calculation as required and also
 containing their submission.

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 (g) On 30.5.2006 the petitioners received a final
 order dated 5.5.2006 passed by the Settlement
 Commission dismissing the application on the ground
 that the affidavit has not been filed by the
 petitioners as required by the interim order dated
 16.3.2006.

¶26

 (h) On 4.10.2006 the petitioners filed a Writ
 petition impugning the order of the Settlement
 Commission dated 5.5.2006 and the High Court vide
 its order dated 10.4.2006 directed the Settlement
 Commission to re-hear the petitioners’ application
 on merits.

¶27

 : 5 :

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 (i) On 6.6.2007 the Settlement Commission passed the
 impugned order as aforesaid.

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 6. The petitioners’ Counsel states that apart from
 the petitioners’ grievance relating to the non-grant
 of the deduction relating to freight, they have no
 other grievance against the order of the Settlement
 Commission and the petitioners are accepting the
 other findings made in the said order of the
 Settlement Commission.

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 7. On the question relating to non grant of
 deduction of freight, the petitioners have first
 drawn our attention to the documents at Exhibit-1 to
 the affidavit-in-reply dated 24.10.2007 filed by
 Mr.Harbir, the Deputy Director of respondents.
 According to the petitioners this document at
 Exhibit-1 is a document which was seized by the
 Excise officials. It is therefore, annexed to the
 affidavit-in-reply. The petitioners contended that
 it is the case of the Excise officials that the
 invoices prepared by the petitioners did not reflect
 the correct position. The Excise officers however,
 contended that the documents at Exhibit-1 was
 recovered from the possession of one Shri Sanjay
 Joshi, Sales Manager of M/s.HSG and were in the
 nature of "actual profit & loss account of the
 petitioner for the period from May-1999 to
 November-2001". It is the case of the petitioners

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 : 6 :

¶32

 that in the circumstances, the Excise officials have
 inter alia based their case on Exhibit-1 which
 according to them shows true and correct position.
 The petitioners states that in fact, the documents
 at Exhibit-1 does show the true and correct
 position. Their contention however, is that the
 sale price which is the first item in column-1 was
 the sale price-cum-freight and it was in these
 circumstances, that the freight was shown as a
 deduction in the said documents. Counsel for the
 petitioners states that it was never their case that
 they had actually paid the freight. They admit the
 fact that freight was actually paid by the
 customers. Their contention is however, that in the
 particular system of accounting that they follow, in
 Exhibit-1 the sale price was taken as sale
 price-cum-freight. However, in the customers’

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 account which was maintained separately and which is
 annexed to the affidavit-in-reply at Exhibit-2,
 credit was given to the customers in respect of the
 freight amount. Their contention was that if the
 documents at Exhibit-1 and Exhibit-2 to the
 affidavit-in-reply are read together and

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 harmoniously, it would lead only to the conclusion
 that they were entitled to a deduction in relation
 to the freight amount as actually paid by the
 customers. It is their contention that it was never

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 their case that the petitioners have paid the
 freight amount as has wrongly been made the basis of

¶36

 : 7 :

¶37

 dis-allowing their claim of deduction towards

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 freight from the assessable value.

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 8. In our view, the documents at Exhibit-1 and
 Exhibit-2 to the affidavit-in-reply dated 24.10.2007
 which are described in the said affidavit as "actual
 profit & loss account of the petitioners for the
 period from May-1999 to November-2001" and the
 summary sheet for 21 files containing the details of
 monthwise transactions ought to have been
 considered.

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 9. In the net result, while confirming all other
 findings of the Settlement Commission, we remand the
 matter to respondent no.2 for the purpose of
 re-evaluating the question of grant of deduction to
 the petitioners in respect of freight charges after
 considering the aforesaid documents at Exhibit-1 and
 Exhibit-2 and any other relevant documents in this
 regard which already form a part of the record
 before the Tribunal.

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 10. Rule is therefore, made absolute in the
 aforesaid terms.

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(R.S.Mohite,J) (F.I.Rebello,J)

Gopal Glass Works Limited v. Union of India and Ors.

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Gopal Glass Works Limited v. Union of India and Ors.

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