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1987 (7) TMI 105 - HC - Central Excise
Issues Involved:
1. Deductibility of post-manufacturing expenses. 2. Classification of caps and capping charges. 3. Cost of cartons and partitions. 4. Secondary and special packing. 5. Freight charges. 6. Additional sales tax. 7. Interest and customers' credit. 8. Latexing and confiscation. 9. Sole selling agent's commission. 10. Other miscellaneous items. Detailed Analysis: 1. Deductibility of Post-Manufacturing Expenses: The petitions were filed seeking deductions for various post-manufacturing expenses. The legal position on such deductions was clarified by the Supreme Court in Union of India & Ors. v. Bombay Tyre International Ltd., 1983 E.L.T. 1896 (S.C.). The High Court noted that the Supreme Court's judgment set the legal position, making these petitions technically non-survivable. However, the High Court decided to address the specific items of controversy to avoid injustice to the petitioners. 2. Classification of Caps and Capping Charges: The petitioners argued that caps and packing materials are not part of the aluminum extruded tubes and containers, and thus should not be included in the excisable value. They relied on the judgment in Metal Box Co. of India Ltd. v. Union of India, which concluded that caps and capping charges are not within the scope of Item 27(e) of the Tariff. The High Court upheld this view, stating that the Supreme Court's decision in Bombay Tyre International Ltd. did not address the classification under specific tariff headings. 3. Cost of Cartons and Partitions: The petitioners claimed that the cost of cartons and partitions should be excluded as they are durable and returnable. Although technically they should have claimed this at the time of filing returns, the High Court allowed them to lead evidence before the Assistant Collector to prove the durability and returnability of these items. 4. Secondary and Special Packing: The High Court noted that secondary or special packing done for facilitating transport or at the buyer's request cannot be included in the excisable value, as clarified in Bombay Tyre International and Union of India v. Godfrey Philips India Ltd. The petitioners were allowed to present evidence on this matter before the Assistant Collector. 5. Freight Charges: The petitioners can claim deductions for freight charges following the guidelines in the Bombay Tyre International judgment, particularly paragraphs 49 and 50. 6. Additional Sales Tax: Relying on Section 4(4)(d)(ii) of the Central Excises and Salt Act, the High Court noted that sales tax and other taxes payable on goods cannot be included in the duty. The Assistant Collector should consider this when proper material is presented by the petitioners. 7. Interest and Customers' Credit: The petitioners did not initially spell out these items in their petitions. However, the High Court allowed them to claim deductions for interest on borrowings and interest on receivables, as these are post-sale expenses, referencing the Supreme Court's judgment in Assistant Collector v. Madras Rubber Factory. 8. Latexing and Confiscation: Latexing, similar to capping, was argued to be a post-manufacturing process not included in the excisable value. The High Court allowed the petitioners to lead evidence on latexing and confiscation before the Assistant Collector, noting that these processes are for facilitating transport and not part of the manufacturing process. 9. Sole Selling Agent's Commission: The petitioners conceded that the sole selling agent's commission is not excludible. 10. Other Miscellaneous Items: The High Court allowed the petitioners to present evidence on other items listed in their petitions if they fall within the scope of the Bombay Tyre International judgment. However, specific items like motor car expenses, repairs and maintenance, auditor's remuneration, and others were given up by the petitioners. Order: The High Court directed the Assistant Collector to allow the petitioners to submit their statement of deductions and supporting evidence within twelve weeks. The Assistant Collector is to finalize the price list and deductions within another twelve weeks, considering the observations made. The earlier order by the Assistant Collector was set aside, and there was no order as to costs.
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