1991 (7) TMI 75 - HC - Central Excise

Valuation - Post-manufacturing expenses - Deduction of - Refund - Limitation - Duty collected without authority of law

Summary

Issues:
Challenging legality and validity of order rejecting deductions for post-manufacturing expenses. Claiming deductions for marketing, distribution, advertising, freight, interest, and packing expenses. Rejection of refund claims by the Assessing Authority. Dispute over deductions for commission, cost of packing, interest on book debts, averaged freight, cash discount, and quantity/target discount.

Analysis:
The petitioners challenged the order rejecting deductions for post-manufacturing expenses, claiming deductions for various expenses related to manufacturing activities. The Assessing Authority initially rejected refund claims, leading to a writ petition filed in 1981. Following a Supreme Court judgment, the court directed the authorities to consider deductions under specific headings like interest on book debts, averaged freight, discount, commission, and packing. The Assistant Collector's subsequent order in 1984 rejected some deductions but accepted others.

The court addressed the erroneous findings of the Assistant Collector regarding the withdrawal of claims for commission, cost of packing, and interest on book debts. The court directed the Assessing Authority to reconsider these deductions. Additionally, deductions for averaged freight were accepted, but claims for cash discount and quantity/target discount were rejected by the Assistant Collector based on limitations under the Central Excises & Salt Act, 1944.

The court disagreed with the Assistant Collector's interpretation of limitations, citing previous judgments that supported the grant of refunds beyond certain periods. Referring to relevant case law, the court emphasized the authority of the High Court to compel refunds even if limited by statutory provisions. Consequently, the court directed the Assistant Collector to reconsider the cash discount claims from 1971 onwards and the quantity/target discount claims without uniformity requirements.

In conclusion, the court set aside the 1984 order and directed the Assistant Collector to review all deduction claims, including commission, cost of packing, interest on book debts, cash discount from 1971, and quantity/target discount. The Assistant Collector was instructed to allow the petitioners to present their case, produce relevant documents, and make submissions, with a mandate to resolve the matter expeditiously within six months.