IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.7370 OF 2007 WRIT PETITION NO.7370 OF 2007 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 ---- Mr.V.Sridharan with Mr.Prakash Shah i/by PDS Legal for the petitioners. Mr.M.I.Sethna, Senior Advocate with Mrs.S.V.Bharucha, Mr.R.Ashokan and Mr.H.P.Chaturvedi for the respondents. ---- Coram : F.I.Rebello & Coram : F.I.Rebello & Coram : F.I.Rebello & R.S.Mohite,JJ R.S.Mohite,JJ R.S.Mohite,JJ Date : 13.03.2008. : 2 : Judgment :- ( Per : R.S.Mohite,J) Judgment :- ( Per : R.S.Mohite,J) Judgment :- ( Per : R.S.Mohite,J) 1. Heard both sides. Rule, made returnable forthwith. 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. 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. 4. The finding of the Settlement Commission as regards the petitioners’ claim regarding freight is contained in paragraph 9.2 of the impugned order and reads as follows :- : 3 : 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." 5. The brief facts of the case were as under :- (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. (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. (c) On 25.10.2005 the Settlement Commission admitted the petitioners’ application for settlement. : 4 : (d) On 18.1.2006 the petitioners filed a compilation and also furnished comprehensive submissions in respect of various deductions claimed by them. (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. (f) On 9.5.2006 the petitioners filed a statement showing the calculation as required and also containing their submission. (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. (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. : 5 : (i) On 6.6.2007 the Settlement Commission passed the impugned order as aforesaid. 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. 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 : 6 : 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’ 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 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 their case that the petitioners have paid the freight amount as has wrongly been made the basis of : 7 : dis-allowing their claim of deduction towards freight from the assessable value. 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. 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. 10. Rule is therefore, made absolute in the aforesaid terms. (R.S.Mohite,J) (F.I.Rebello,J) (R.S.Mohite,J) (F.I.Rebello,J) (R.S.Mohite,J) (F.I.Rebello,J)