1984 (4) TMI 296 - AT - Central Excise

Summary

Issues: Valuation of goods for excise duty purposes based on discounts claimed by the appellants.

In the case before the Appellate Tribunal CEGAT New Delhi, the appellants were manufacturing air-conditioners and selling them through different modes, including sales to dealers. The appeal concerned the valuation of goods for excise duty purposes in relation to sales to dealers. The appellants claimed a deduction of Rs. 550/- and Rs. 650/- under the category of "Dealers Coverage" in their price-list, contending that it was a trade discount. However, they failed to provide evidence or documentation to support how these amounts were calculated. The appellants argued that a recent Supreme Court judgment allowed for trade discounts to be deducted from the sale price, regardless of how they were described. The respondent, citing the same Supreme Court judgment, argued that expenses for after-sales service cannot be deducted from the selling price. The respondent pointed out that the appellants had admitted that a portion of the claimed amount was for after-sales service, which should be included in the assessable value of the goods.

The Tribunal considered the Supreme Court's clarification on trade discounts, emphasizing that discounts must be established under agreements, terms of sale, or established trade practices to be considered as such. The Tribunal noted that the Supreme Court highlighted the importance of the nature of the discount being known at or before the removal of the goods. In this case, the Tribunal found that the after-sales service charges claimed by the appellants could not be considered a trade discount based on the guidelines set by the Supreme Court. Therefore, the Tribunal rejected the appellants' argument that the after-sales service charges could be treated as a discount and upheld the decision of the lower authorities. Consequently, the appeal was dismissed for lack of merit.