2005 (5) TMI 373 - AT - Central Excise

Summary

Issues:
1. Confirmation of demands on freight expenses, discount deductions, and turnover tax.
2. Validity of deduction claimed towards freight expenses.
3. Validity of deduction claimed towards discount.
4. Validity of deduction claimed towards turnover tax.
5. Imposition of penalty under Rule 173Q.

Analysis:

1. Confirmation of Demands:
The Commissioner confirmed demands on freight expenses, discount deductions, and turnover tax, along with imposing a penalty of Rs. 10 lakhs. The appellants disputed these demands and penalties.

2. Freight Expenses:
The appellants claimed deduction towards freight expenses at Rs. 4.55 per crate, leading to a demand of Rs. 2,70,645 for allegedly collecting excess freight charges. However, the Tribunal held that the excess amount collected cannot be confirmed as duty based on the Supreme Court's decision in Baroda Electric Meters Ltd. v. CCE.

3. Discount Deductions:
The appellants claimed a deduction of Rs. 2/- per crate towards discount, which was disputed by the Commissioner. The appellants argued that they had extended a Quantity Discount Scheme of Rs. 4.70 per crate, supported by a certificate from a Chartered Accountant. The Tribunal found that the discount claimed was valid as it was part of a quantity discount scheme, allowing the deduction.

4. Turnover Tax Deductions:
The Commissioner denied abatement towards turnover tax, alleging that the appellants collected it from buyers without authorization. The appellants refuted this claim, providing evidence that they did not collect any amount representing turnover tax. The Tribunal held that the deduction towards turnover tax was permissible based on established legal precedents, setting aside the Commissioner's decision.

5. Penalty Imposition:
The Tribunal also ruled that the penalty under Rule 173Q was not imposable on the appellants, given the findings in their favor on the disputed demands and deductions. Consequently, the Tribunal set aside the Commissioner's order and allowed the appeal in favor of the appellants.