2011 (5) TMI 773 - AT - Central Excise

Allowance of post manufacturing expenses as deduction with regard to Trade discount and Additional discount, Insurance and Transportation charges as per Chartered Accountant Certificate Held that - respondents have discharged their onus by filing the Chartered Accountant certificate certifying their claim of discount, freight and insurance. To controvert the certificate issued by the Chartered Accountant, onus is on the Revenue. Without any evidence the contention of the Revenue is not acceptable that the claim allowed by both the authorities below is not illegal and proper and is not sustainable, appeals filed by the Revenue are rejected

Summary

Issues: Revenue's appeal against allowance of post manufacturing expenses as deduction for Trade discount, Additional discount, Insurance, and Transportation charges based on Chartered Accountant Certificate.

Analysis:
1. The case involved the appeal by Revenue against the orders allowing post manufacturing expenses deductions for Trade discount, Additional discount, Insurance, and Transportation charges based on a Chartered Accountant Certificate. The respondents, manufacturers of P & P medicament, claimed these deductions in their price declarations as per Rule 173C of the Central Excise Rules, 1944. Both lower authorities allowed the deductions following guidelines from the Bombay Tyre International case and the certificate's verification by the Range Officer.

2. The Revenue contended that the Central Excise (Valuation) Rules, 2000 allow exclusion of transportation costs only if shown separately in the invoice and for the actual cost charged from buyers. The same applied to insurance costs. The Revenue challenged the deduction of trade and additional discounts, citing the absence of provisions post-introduction of transaction value under Section 4 w.e.f. 1-7-2000. The Revenue sought to set aside the lower authorities' orders based on these grounds.

3. The Tribunal heard the arguments and examined the records. It noted that the lower authorities had allowed the post manufacturing expenses deductions following the Bombay Tyre International guidelines. The adjudicating authority observed that expenses towards transport, insurance, etc., from the factory to the place of removal form part of the sale price for excise duty levy. The certificates were found in order after verification by the Range Officer.

4. The respondents supported their deductions with the Chartered Accountant certificate and Range Officer's verification. The Tribunal referenced a previous case where abatement towards equalized freight was allowed to arrive at the assessable value. The Tribunal held that the onus to prove the discount passing to buyers rested with the assessee, which they fulfilled with the certificates. The Revenue's challenge lacked corroborative evidence and was deemed unsustainable.

5. Ultimately, the Tribunal upheld the lower authorities' orders, rejecting the Revenue's appeal. The deductions for post manufacturing expenses were deemed legal and proper based on the Chartered Accountant certificate and verification. The Tribunal found no merit in the Revenue's appeal and no reason to interfere with the impugned orders, thus upholding the decisions in favor of the respondents.