2008 (7) TMI 105 - AT - Central Excise

Includibility of Packing charges inA.V. - Commissioner (Appeals) has come to the conclusion that additional packing charges were of that packing which was done on the specific request of the customer as against the original packing, which is of gunny bags - factual findings of the Commissioner regarding packing as well as interest charges sought as deductions, is not controverted by Revenue by adducing contrary evidence held that additional packing charges are not includible in A.V.

Summary

Issues:
1. Deduction claimed by the respondents in respect of packing charges.
2. Deduction on account of interest on credit sales.

Analysis:
1. Deduction claimed by the respondents in respect of packing charges:
The appeal was filed by the Revenue against the order-in-appeal dated 4-10-2002. The ld. Commissioner (Appeals) allowed the deduction claimed by the respondents in respect of packing charges. The respondents submitted various documents during the personal hearing to prove that the deductions claimed by them are admissible. These documents included price declarations, purchase orders, and order acknowledgements. The appellate tribunal observed that the adjudicating authority had ignored vital facts related to packing charges, such as specific instructions from clients for packing bottles in corrugated boxes or shrink wraps instead of gunny bags. It was noted that the respondents had foregone the entire Modvat Credit on packing materials, making them entitled to a deduction on account of packing materials. The tribunal relied on various case laws allowing deductions for packing charges and upheld the deduction claimed by the respondents.

2. Deduction on account of interest on credit sales:
Regarding the issue of interest on credit sales, the tribunal examined the period of credit requested by clients as per the purchase orders and order acknowledgements. The respondents had filed price lists specifying the days of credit requested by clients, and these were found to match the terms agreed in the purchase orders. The respondents claimed deduction of interest based on the prevailing rate charged by banks for cash credit and bill discounting facilities. The tribunal noted that the department did not dispute the figures provided by the respondents and, based on the order of the Commissioner (Appeals) and relevant case laws, allowed the deduction on account of credit sale interest. The tribunal cited case laws where interest on credit sales was held to be deductible from the assessable value.

In conclusion, the appellate tribunal, consisting of Members M.V. Ravindran and K.K. Agarwal, upheld the order-in-appeal allowing deductions for packing charges and interest on credit sales. The tribunal found that the factual findings of the Commissioner regarding packing and interest charges were well reasoned and not controverted by the Revenue with contrary evidence. Therefore, the appeal filed by the Revenue was rejected, and the order-in-appeal was upheld.