Civil Appeals Nos
2801 06 of 1987
689 From the Judgment and Order dated 871987 of the Customs Excise and Gold Control Appellate Tribunal New Delhi in Appeal Nos
E 1533 1521 1528 30  1531 of 1986and Order No498 to 503 of 1987
Soli J Sorabji VJ Francis NM Popli Mrs Nisha Bagchi and section Ganesh for the Appellant
Mrs Indu Malhotra and P Parmeshwaran for the Respondent
The Judgment of the Court was delivered by SABYASACHI MUKHARJI J
These are appeals under Section 35Lb of the Central Excises  Salt Act 1944 hereinafter called the Act 
The appellant manufactures compressed Oxygen and dissolved acetylene falling under tariff item No 14H of the First Schedule of the Act as it stood at the relevant time
The appellant had received showcause notice in respect of the period from 111984 to 3111984 and also five other show cause notices for different periods in respect of the price lists submitted by the appellant seeking approval of the price list of gases in question
It was found by the Tribunal that the appellant manufactures and sells oxygen and DA Gases
These are sold from the factory of the appellant at Visakhapatanam and from their depotservice centres at Vijayawada Rajamundry Vadlapudi Jeypore and Damanjodi
They sell their product to Government undertakings as per the rates determined by DGS  D New Delhi
In respect of other buyers the appellant sell their product at various prices on slab basis
It is stated that the slab basis is related to what the manufacturers call a quantitative discount
According to the Tribunal the revenue had undertaken verification of the prices charged by the manufacturers at their depots and service centres
These were found to be much more than the prices indicated in the approved price list
It also observed that the manufacturers did not furnish to the department quantities of their product which were sold from their depotsservice centres and that the appellant charged from their buyers apart from the declared price list the following i Delivery and collection charges where applicable ii Cylinder deposit and iii Rentals
690 The department s case was that these being additional charges should form part of the assessable value
It was urged on behalf of the revenue that the price list submitted by the manufacturers in respect of clearances from their Vijayawada depot the appellant claimed abatements on account of freight and handling charges in respect of which they did not produce any evidence
It was therefore held by the Department that no such deduction was admissible
It however appeared to the Tribunal that the manufacturers have admitted that separate prices were indicated for the same goods in respect of Visakhapatnam factory which is the place of manufacture and Vijayawada a place about 400 Km
away which is only a depot
It was explained that the difference in the prices was in consideration of special delivery and collection charges which were admittedly incurred for transporting the goods from Visakhapatnam to Vijayawada
The Tribunal noted that the appellant had not come forward to offer concrete evidence of actual freight charges etc
It however emphasised that the price at the factory gate is ascertainable
Assessment should therefore be made in terms of that price
Hence there was no scope of deduction from that price
It therefore directed that if the ex factory prices were not ascertainable and the goods were to be assessed ex depot then it would be for the manufacturer to claim on the basis of actual evidence
It remanded the case to the Asstt
Collector to refix the assessable value as directed
It is necessary to reiterate the principle upon which the assessable value will have to be determined in this case
The cost of transportation from factory at Visakhapatnam and the depot at Vijayawada cannot be included normally in computation of the value
The value has to be computed under Section 41a read with Section 44di of the Act Where the wholesale price is ascertainable at the factory gate the question 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 purposes of duty under the Act
In this case the price of the goods at the factory gate Visakhapatnam is known
It is clear from Section 4 that the delivery and collection charges have nothing to do with the manufacture as they are for delivery of the filled 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 are to be included in the assessable value irrespective of who has paid for the same but 691 the loading exepnses incurred outside the factory gate are excludible
Duty of excise is a tax on the manufacture not a tax on the profits made by a dealer on transportation
It is necessary to reiterate that value for assessable goods must be determined in terms of section 4 of the Act
The said section 41 provides that where the duty of excise is chargeable on any excisable goods with reference to value such value shall subject to the other provisions of this section be deemed to be the normal price therefore that is to say the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place or removal where the buyer is not a related person and the price is the sole consideration for the sale
Place of removal under section 44b has been defined to mean a factory or any other place or premises of production or manufacture of the excisable goods or a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment of duty from which such goods are removed
The scope of determination of value has been explained and reiterated by this Court in Union of India and others etc
vs Bombay Tyre International Ltd etc
  Following the principle of the said case the Tribunal noted in the judgment under appeal that the price ex factory is ascertainable
If once that is the position as the Tribunal rightly pointed out the issue of deduction of rate from the prices ex depots does not survive for the decision
But if the ex factory prices were not ascertainable and the goods were to be assessable ex depot then it would be for the manufacturer to claim on the basis of actual evidence the deductions that should be admissible from the price list as per the provisions of the Act
Counsel for the respondent Ms Indu Malhotra who argued this case with considerable ability before us drew our attention to the following observations in the Bombay Tyre International supra at pages 376 and 377 of the report Accordingly we hold that pursuant to the old section 4a the value of an excisable article for the purpose of the excise levy should be taken to be the price at which the excisable article is sold by the assessee to a buyer at arm s length in the course of wholesale trade at the time and place of removal
Where however the excisable article is not sold by the assessee in wholesale trade but for example is consumed by the assessee in his own industry the case is one 692 where under the old section 4a the value must be determined as the price at which the excisable article or an article of the like kind and quality is capable of being sold in wholesale trade at the time and place of removal
Where the excisable article or an article of the like kind and quality is not sold in wholesale trade at the place of removal that is at the factory gate but is sold in the wholesale trade at a place outside the factory gate the value should be determined as the price at which the excisable article is sold in the wholesale trade at such place after deducting therefrom the cost of transportation of the excisable article from the factory gate to such place
She also drew our attention to the observations of the Court at pages 391 and 392 of the Report Therefore the expenses incurred on account of the several factors which have contributed to its value upto the date of sale which apparently would be the date of delivery are liable to be included
Consequently where the sale is effected at the factory gate expenses incurred by the assessee up to the date of delivery on account of storage charges outward handling charges interest on inventories stocks carried by the manufacturer after clearance charges for other services after delivery to the buyer namely after sales service and marketing and selling organisation expenses including advertisement expenses can not be deducted
It will be noted that advertisement expenses marketing and selling organisation expenses and after sales service promote the marketability of the article and enter into its value in the trade
Where the sale in the course of wholesale trade is effected by the assessee through its sales organisation at a place or places outside the factory gate the expenses incurred by the assessee upto the date of delivery under the aforesaid heads cannot on the same grounds be deducted
But the assessee will be entitled to a deduction on account of the cost of transportation of the excisable article from the factory gate to the place or places where it is sold
The cost of transportation will include the cost of insurance on the freight for transportation of the goods from the factory gate to the place or places of delivery
 693 She contended that in the instant case in view of the conduct of the dealer there was doubt as to what was the real ex factory price
If there was a finding that there was no real ex factory price then the aforesaid observations would have required serious examination
But in this case the case has not proceeded on that basis
On the contrary there is a clear finding that there was a ex factory price which is 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
Inasmuch as that is the correct position in law we direct that the Assistant Collector will re fix the assessable value as indicated in this judgment
The Tribunal s judgment is modified accordingly
These appeals are disposed of
There will be no order as to costs
GN Appeals disposed of


Summary:
The short point which arose for consideration in this case was whether without a prior agreement between two or more Regional Transport Authorities of the regions through which an inter regional route passes it was open to any one of the said Regional Transport Authorities to grant a permit to ply a stage carriage on the said inter regional route under the provisions of the  the 
The North Bihar Regional Transport Authority invited applications for granting stage carriage permits in respect of inter regional routes connecting certain places within its jurisdiction and certain other places within the jurisdiction of the South Bihar Regional Transport Authority
The petitioner filed a writ petition in the High Court questioning the power of the North Bihar Regional Transport Authority to grant permits above said without a prior agreement between it and the South Bihar Regional Transport Authority
The High Court dismissed the writ petition
Aggrieved by the order of the High Court the petitioner moved this Court for relief by this petition for special leave
Dismissing the petition the Court  HELD Under section 451 of the  an application for a permit for a vehicle proposed to be used in two or more regions within the same State has to be made to the Regional Transport Authority of the region in which the major portion of the proposed route or area lies and in case the portion of the proposed route or area in each of the regions is approximately equal to the Regional Transport Authority of the region in which it is proposed to keep the vehicle
596F G 594 Under section 63 of the  in the absence of any rules to the contrary under the  a permit granted by the Regional Transport Authority of one region is not valid in any other region unless the permit has been counter signed by the Regional Transport Authority of the other region while counter signing a permit it is open to the Regional Transport Authority of the other region to impose its own conditions which it might have imposed if it had granted the permit
If there are any rules framed by the State Government under the  they supersede the provisions of section 63
If there is an agreement between the States concerned with regard to the grant and the counter signature of the permits then it is not necessary to comply with the procedure prescribed by section 63 for counter signature of permits
In this case the provisions of section 63 of the applied to all the inter regional permits in the State of Bihar
as no rule framed under the by the State of Bihar regarding the procedure to be followed in the case of counter signature of permits was brought to the notice of the Court
598R H599A Section 473 being inapplicable to the inter State or inter regional permits it is open to the Regional Transport Authority concerned to decide whether there is any necessity to issue the permit applied for
The does not contain any procedure for two or more Regional Transport Authorities entering into an agreement before an application for an inter regional permit is granted
The only provision which provides for an agreement to be arrived at for purposes of counter signature is the agreement between two or more States referred to in the first proviso to sub section 3 of section 63 of the 
An inter State agreement of that nature can be arrived at only after following the procedure prescribed under sub section 3A of section 63 when it is open to the parties affected by the proposal to make representations
In one sense the procedure prescribed in sub section 3A of section 63 takes the place of procedure to be followed by a Regional Transport Authority while granting or counter signing permits
In this case since there is no provision in the or in the Rules made by the State Government requiring the existence of such a prior agreement it is difficult to hold that in the absence of such a prior agreement between the Regional Transport Authorities concerned an application for the grant of an inter regional permit should not be taken up for consideration by a Regional Transport Authority which had the jurisdiction to grant it under section 45 of the 
If a permit is issued by a Regional Transport Authority and it is not counter signed by the other Regional Transport Authority the permit will not be effective in the other region
What has been observed above is in accord with the deci 595 sion of a Constitution Bench of this Court in Ms Bundelkhand Motor Transport Co Nowgaon vs Behari Lal Chaurasia and Anr 599B 601F G 602E G The North Bihar Regional Transport Authority had jurisdiction to consider the applications for the grant of the inter regional permits in question
After they were granted it was open to the South Bihar Regional Transport Authority to consider whether they should be counter signed or not after following the prescribed procedure
The High Court was right in dismissing the Writ Petition
603C D Mohd lbrahim etc
vs State Transport Appellate Tribunal Madras etc  Ms Bundelkhand Motor Transport Company Nowgaon vs Behari Lal Chaurasia and Another   referred to