1989 (9) TMI 107 - HC - Central Excise

Summary

Issues Involved:
1. Deduction of interest on distributors' advances.
2. Deduction of carriage and freight costs.
3. Deduction of costs of special packing.
4. Refund of excess excise duty paid.
5. Lawfulness of the assessments made by Respondent No. 6.

Summary:

1. Deduction of Interest on Distributors' Advances:
The Petitioner Company claimed deduction for interest paid on advances received from distributors, arguing these were security deposits to ensure timely payments. Respondent No. 6 rejected this claim, stating the advances were used in the company's operations and were akin to borrowings from financial institutions. The court upheld this decision, noting that the interest payments were not directly related to the determination of the assessable value of goods u/s 4 of the Central Excises and Salt Act, 1944.

2. Deduction of Carriage and Freight Costs:
The Petitioner Company sought deductions for carriage and freight costs, asserting these were included in the price charged to wholesalers. Respondent No. 6 disallowed the claim, finding no evidence that these costs were included in the wholesale price. The court agreed, emphasizing that the Petitioner failed to prove the inclusion of transport charges in the price payable by wholesalers. The court noted that deductions for transportation costs are permissible u/s 4(2) when the price for delivery at the place of removal is unknown, but the Petitioner did not meet the burden of proof.

3. Deduction of Costs of Special Packing:
The Petitioner Company claimed deductions for special packing costs, arguing that certain packings were done at the request of customers. Respondent No. 6 rejected this claim, determining that the packings were necessary for marketing the biscuits and were not special packings. The court upheld this decision, citing the lack of evidence to support the claim that the packings were special and done at the request of wholesalers. The court referenced the Supreme Court's decisions in Union of India v. Bombay Tyre International Ltd. and Union of India v. Godfrey Philips India Ltd., which clarified that only packing necessary for putting the excisable article in the condition in which it is generally sold in the wholesale market at the factory gate can be included in the assessable value.

4. Refund of Excess Excise Duty Paid:
The Petitioner Company sought a refund of excess excise duty paid from 1st October 1975 to 6th August 1980. The court noted that the claim for refund from 1st April 1971 to 30th September 1975 was the subject of another writ petition. The court found no merit in the Petitioner's claim for further deductions and thus no basis for additional refunds beyond what was already allowed by Respondent No. 6.

5. Lawfulness of the Assessments Made by Respondent No. 6:
The court examined whether the assessments made by Respondent No. 6 were lawful. It found that Respondent No. 6 had acted within his jurisdiction and had not committed any error apparent on the face of the record. The court emphasized that the findings of fact by the Assistant Collector regarding the nature of packing and transportation costs were supported by evidence and could not be assailed in a writ court.

Conclusion:
The court dismissed the writ petition with costs, concluding that the Petitioner Company failed to substantiate its claims for deductions and refunds. The assessments made by Respondent No. 6 were upheld as lawful and justified.