2006 (5) TMI 4 - AT - Central Excise

Summary

Issues:
1. Whether the margin of dealers should be treated as part of the assessable value for discharging central excise duty.
2. Whether the dealers were acting as agents of the manufacturer.
3. Interpretation of Circular dated 17.10.96 in determining the relationship between the manufacturer and the dealers.

Analysis:
1. The appellants, manufacturers of tractors, adopted the sale price to dealers as the assessable value for discharging central excise duty. Two show cause notices were issued to include the margin of dealers in the assessable value. The adjudicating authority found that dealers bought tractors outright and sold them after adding their margin, without any commission from the manufacturer. Duty demands were dropped based on this factual finding.

2. The revenue appealed the decision, claiming that dealers were receiving commission based on a Circular dated 17.10.96. The Circular instructed dealers to charge a margin from customers, considering their expenses. The Tribunal analyzed the Circular and concluded that it indicated a principal-to-principal sales relationship, not a commissioning agent one. As per Section 4 of the Central Excise Act, the normal sale price constitutes the assessable value, and excise duty is not concerned with resale prices unless the first sale is affected by specific factors, which was not the case here.

3. The Tribunal found no merit in the revenue's case, as the Circular supported the manufacturer-dealer relationship as outright sales. The appeals of the manufacturer were allowed, providing consequential relief. The judgment emphasized that excise duty is based on the manufacturer's sale price, and the resale price by dealers is not relevant unless specific conditions are met, which were absent in this scenario.