1999 (4) TMI 539 - AT - Central Excise

Issues Involved:
1. Assessable value determination for slow-moving, non-standard goods.
2. Applicability of different price lists under Central Excise Rules.
3. Classification of buyers and their impact on assessable value.
4. Acceptance of trade discounts and their variations.

Issue-wise Detailed Analysis:

1. Assessable Value Determination for Slow-Moving, Non-Standard Goods:
The appellants, manufacturers of tools, filed a price list under Part I for a consignment with an assessable value of Rs 4,81,338/-. The Assistant Collector revised the assessable value to Rs 24,09,333/-, leading to a differential duty demand of Rs 2,51,477.61. The appellants argued that the goods were slow movers and non-standard, remaining unsold for over a year, and thus offered at a lower price to clear stock. The Assistant Collector and the Collector (Appeals) rejected this plea, stating that the assessable value must reflect the normal selling price unless the goods are proven to be sub-standard, deteriorated, or scrap.

2. Applicability of Different Price Lists Under Central Excise Rules:
The appellants contended that they inadvertently filed the price list under Part I instead of Part II, which is applicable for sales to a specific class of buyers. The Collector (Appeals) rejected this argument, noting that Part II price lists apply to sales to a class of buyers under Section 4(a) proviso (i) of the Central Excise Act, 1944. The responsibility to prove the buyer as a special class lies with the assessee. The buyer, M/s. Best Drill Centre, was a dealer, and the goods were not sold to any other dealer at the same price.

3. Classification of Buyers and Their Impact on Assessable Value:
The appellants argued that the buyer, an industrial consumer, constituted a different class and the lower price should be accepted. They cited several judgments where sales to industrial consumers at negotiated prices were accepted, such as Castrol India Ltd. v. C.C.E. and DCW Ltd. v. C.C.E. The Tribunal had previously held that different classes of buyers, such as industrial consumers, could justify different prices, provided there is no extra commercial consideration. The Tribunal accepted that sales to industrial consumers, even at lower prices, are valid if conducted at arm's length and without extra consideration.

4. Acceptance of Trade Discounts and Their Variations:
The appellants cited cases like Ind-Sphinx Precision Pvt. Ltd. v. C.C.E. and Ester Industries Limited v. C.C.E., arguing that trade discounts could vary based on commercial considerations such as buyer status, quantity sold, market conditions, and competition. The Tribunal had held that such variations are permissible if not based on extra commercial considerations. The appellants' sale to M/s. Best Drill Centre was considered a valid transaction without extra commercial considerations, thus justifying the lower price.

Conclusion:
Upon careful consideration, the Tribunal recognized that different classes of buyers could justify different prices. The sale to M/s. Best Drill Centre, an industrial consumer, was accepted as a separate class of buyer. The appellants' filing of the price list under Part II was deemed a procedural lapse, and the lower price offered for slow-moving goods was accepted. The impugned order was set aside, and the appeal was allowed, acknowledging the substantive benefits provided under law and the parameters of Section 4(1)(b) of the Central Excise Act.

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