1984 (3) TMI 65 - HC - Central Excise

Valuation - Price list - Wholesale cash price - Order - Freight - Admissible deduction - Revision and review

Summary

Issues Involved:
1. Legality of the demand notice issued by the Superintendent of Central Excise.
2. Deductibility of cash discount.
3. Deductibility of equalized freight.
4. Deductibility of secondary packing charges.
5. Treatment of post-manufacturing expenses.

Detailed Analysis:

1. Legality of the Demand Notice Issued by the Superintendent of Central Excise:
The petition challenges a demand notice issued by the Superintendent of Central Excise, which required the petitioner to pay Rs. 16,37,621. The petitioner contended that the demand notice was misconceived as it did not account for several deductions allowed by the Collector of Central Excise. The Court noted that the demand notice did not consider the deductions permitted by the appellate authority. Consequently, the demand notice dated 27th September 1982 was set aside.

2. Deductibility of Cash Discount:
The petitioner argued that the cash discount should be allowed irrespective of whether it was actually availed by customers. The price list showed a 4% discount for cash payments, which was known to the parties prior to the removal of goods. The Court referred to Section 4(4)(d) of the Central Excises and Salt Act, 1944, and the Supreme Court's interpretation in Bombay International Tyres (1983 E.L.T. 1896), which stated that trade discounts should be deducted from the sale price if established under agreements or terms of sale known at or prior to the removal of goods. The Court concluded that the cash discount mentioned in the price list must be allowed, irrespective of whether it was actually availed by the customers.

3. Deductibility of Equalized Freight:
The petitioner claimed deductions for equalized freight, which was allowed by the appellate authority but was under review by the revisional authority. The Court noted that the Supreme Court had established that equalized freight is deductible. Therefore, the claim for equalized freight was upheld.

4. Deductibility of Secondary Packing Charges:
The appellate authority had allowed deductions for secondary packing charges. The Department contended that this was incorrect based on a Supreme Court judgment. However, the Court noted that the Collector's order on secondary packing had become final and the reviewing authority had not issued any notice regarding it. Thus, the deduction for secondary packing charges was upheld.

5. Treatment of Post-Manufacturing Expenses:
The petitioner sought deductions under the heading of "post-manufacturing expenses," which were pending in revision. The Court declined to examine each item under this head, leaving it to the revisional authority to decide. The Court expressed its opinion only on cash discount and equalized freight, leaving the final order to be passed by the revisional and reviewing authorities.

Conclusion:
The petition was partly successful. The demand notice dated 27th September 1982 was set aside. The petitioner was entitled to deductions for trade discount, secondary packing, 4% cash discount, and equalized freight. The petitioner was directed to file an application before the Assistant Collector of Central Excise, claiming these deductions and paying the excise duty accordingly. There was no order as to costs in this petition.