1984 (1) TMI 65 - HC - Central Excise

Valuation - Freight, Trade discount, excise duty and other taxes alone excludible - Sale promotion etc. not excludible

Summary

Issues:
Claim for deduction of post-manufacturing expenses including freight, sales promotion expenses, interest, and trading selling profits rejected by Assistant Collector of Central Excise.

Analysis:
The petitioners sought a deduction for post-manufacturing expenses under various heads, which were rejected by the Assistant Collector of Central Excise. The petitioners referred to a Supreme Court decision that brought a significant change in the law regarding permissible deductions for post-manufacturing expenses. They requested to withdraw the petition and claim deductions only for items allowed by the Supreme Court in a specific case. The Union of India argued that certain items were expressly held impermissible by the Supreme Court, and remanding the matter would lead to further litigation. The Court noted that the law regarding deductions for excise duty assessment had been clarified by the Supreme Court, emphasizing that only specific deductions were permissible, such as trade discount, excise duty, and averaged freight.

The Supreme Court's detailed judgment in a specific case clarified that expenses like advertisement, storage, sales organization, and packing were not deductible for excise duty assessment purposes. The Court highlighted that transportation costs from the factory gate to the place of sale could be deducted, including insurance on the freight. The averaged freight included in the wholesale cash price needed to be deducted for excise duty calculation. The Court pointed out that the judgment was limited to the specific items presented and not other expense heads. A subsequent order by the Supreme Court further clarified the deductibility of trade discounts, taxes, and insurance costs related to transportation.

Considering the Supreme Court judgments and observations, the Court concluded that items claimed under certain heads were not permissible deductions for excise duty assessment. However, for one specific item, further inquiry was needed to determine if the sale occurred at the factory gate and the quantum of deductible freight. The Assistant Collector was directed to reevaluate this specific claim based on the Supreme Court's guidelines. The Court rejected the claims under certain heads but allowed the possibility of other permissible deductions if supported by relevant information provided by the assessee within a specified timeframe. The petition was dismissed with no costs awarded.