1957 (10) TMI 31 - Board - Central Excise

Summary

Issues:
Assessment of Central Excise Duty on goods distributed by a company through independent distributors, Allowability of rebates towards post-manufacture expenses, Determination of assessable value under Section 4 of the Central Excises and Salt Act, 1944, Verification and revision of percentages by Collectors of Central Excise, Allowance of discounts on wholesale prices for canvas and leather shoes.

Analysis:
The judgment addresses the issue of assessing Central Excise Duty on goods distributed by a company through independent distributors. The Central Excise Act requires the assessment based on the wholesale cash price at factory gates. Post-factory expenses attributable to Sales Organization are not chargeable to duty. Admissible expenses include distribution expenses for staff engaged in Sales Depots, reasonable travelling expenses for Inspection Staff, advertisements solely for Sales Organization, insurance charges on goods in transit, interest on stock value at Sales Depots, and Octrio and Sales Taxes. The company claimed rebates for expenses on freight charges and special packing.

The judgment further delves into the allowability of rebates towards post-manufacture expenses. The company contended for rebates on expenses like freight, special packing, and other distribution-related costs. The court ruled that while certain expenses like reasonable distribution charges and advertisement expenses were admissible, expenses on freight charges were not fully rebatable as they were voluntarily incurred by the company for price parity. Special packing expenses were deemed necessary and not special, hence not admissible for rebate.

Regarding the determination of assessable value under Section 4 of the Central Excises and Salt Act, 1944, the judgment instructs the Collectors of Central Excise to verify and potentially revise the percentages annually. The court allowed discounts of 16.43% for canvas shoes and 15.93% for leather shoes on wholesale prices. These discounts were calculated based on various expenses like distribution charges, travelling expenses, advertisement expenses, insurance charges, interest, trade discount, expenses on Sales Tax and Octroi duty, and freight discount.

In conclusion, the judgment provides a comprehensive analysis of the assessment of Central Excise Duty, the allowability of rebates for post-manufacture expenses, the determination of assessable value, and the calculation of discounts on wholesale prices for different types of shoes. The court's detailed guidelines aim to ensure a fair and accurate assessment of Central Excise Duty while considering various expenses incurred by the company in the distribution and sale of its products.