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2010 (9) TMI 484 - AT - Central ExciseClassification - Valuation - cash discount - permanent packing material - Held that - (i) yarn made out of 100% Polyester waste and (ii) yarn made out of Acrylic Staple Fibre/Non-cellulosic Soft Waste (Polyester waste) and Viscose staple fibre to be classifiable under Chapter sub-heading 5505 As regards the claim of deduction in relation to the permanent packing material, undisputedly, the invoices issued by the appellants clearly disclose a note to the effect that Cost of Packing would be refunded if packing is returned intact - claim of deduction of cost of such packing material allowed. As far as the claim regarding the cash discount - the invoices issued in relation to the goods cleared on cash payment did not disclose any amount towards the cash discount. That by itself cannot lead to conclusion that there was cash discount in relation to the goods cleared on cash payment. Rather, the records disclose that in relation to the goods cleared on credit, there was excess amount collected on account of the fact that the goods were cleared on credit. - claim of cash discount rejected.
Issues Involved:
1. Classification of various types of yarn. 2. Valuation aspect, specifically the claim of cash discount on packing materials. 3. Claim of deduction in respect of durable packing material. 4. Entitlement to exemption benefit under Notification No. 53/91-C.E. Detailed Analysis: Classification of Yarn: The appellants manufactured yarn classifiable under Chapter Heading 55 of the Central Excise Tariff Act, 1985. The classification disputes involved: - Yarn made out of 100% Polyester waste. - Yarn made out of Acrylic Staple Fibre/Non-cellulosic Soft Waste (Polyester waste) and Viscose staple fibre. - Yarn made out of Polyester and Viscose waste. - Yarn made out of duty-paid components of Non-cellulosic Soft waste/viscose/polyester film in different blends and counts. The appellants claimed the first two types of yarn under Chapter sub-heading 5504.31, while the Department classified them under 5504.29. The third type was claimed under 5505.00 but classified by the Department under 5506.29. The fourth type was also claimed under 5505.00 but classified under 5504.29 by the Department. The Tribunal referred to previous decisions, notably Priyadarshini Spinning Mills Ltd. and Atlantic Spinning & Weaving Mills Ltd., concluding that these products are classifiable under Chapter sub-heading 55.05. Thus, the authority needs to ascertain the appellants' entitlement to exemption benefits under the said classification. Valuation Aspect - Cash Discount: The valuation aspect pertained to the claim of cash discount on packing materials. The appellants argued that their policy allowed for cash discounts in case of sales for cash payment, which should be deductible from the assessable value. However, the Department contended there was insufficient material to support this claim, and the Tribunal agreed, noting that the invoices did not conclusively demonstrate the existence of a cash discount policy. The Tribunal concluded that the amount collected in excess of the price for credit sales could not be considered a cash discount. Deduction for Durable Packing Material: The appellants claimed deductions for the cost of durable packing material, arguing that their invoices stipulated the refund of packing costs if returned intact. The Tribunal referred to the Supreme Court's decision in Triveni Glass Ltd., which held that the cost of durable and returnable packing material should be excluded from the assessable value, regardless of whether the material was actually returned. Consequently, the Tribunal allowed the appellants' claim for deduction of the cost of durable packing material from the assessable value. Exemption Benefit: The appellants claimed entitlement to exemption benefits under Notification No. 53/91-C.E. for yarn made out of Polyester and Viscose waste and yarn made out of duty-paid components of Non-cellulosic Soft waste/viscose/polyester film. The Tribunal noted that the lower authorities had not considered this claim, as the classification was not under Heading 55.05. Since the products were now held to be classifiable under Heading 55.05, the Tribunal directed the Adjudicating Authority to consider the claim for exemption benefits after hearing the parties. Conclusion: The Tribunal modified the orders passed by the lower authorities with the following directions: - The claim of cash discount was rejected as it pertained to amounts collected in excess of the price, not actual discounts. - The claim for deduction of durable packing material costs was allowed. - The classification of the products was confirmed under Chapter sub-heading 55.05. - The Adjudicating Authority was directed to consider the appellants' claim for exemption benefits under Notification No. 53/91-C.E.
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