1987 (2) TMI 173 - AT - Central Excise

Summary

Issues:
- Permissibility of deductions claimed by the appellants from their FOR destination prices.
- Disallowance of deductions by the lower authorities.
- Interpretation of Supreme Court judgments on various types of discounts claimed.
- Examination of specific deductions: Average Freight, Cash/Regular Payment Discount, Turnover Bonus Discount, and Central Sales Tax.

Analysis:

The judgment by the Appellate Tribunal CEGAT, New Delhi, involved the permissibility of various deductions claimed by the appellants from their FOR destination prices. The issues revolved around the disallowance of these deductions by the lower authorities and the interpretation of Supreme Court judgments on similar matters. The first three deductions, namely Average Freight, Cash/Regular Payment Discount, and Turnover Discount, were common to all 13 appeals, while the last deduction for Central Sales Tax was common to a batch of 11 appeals.

The Tribunal observed that the lower authorities had disallowed the deductions without proper examination. The appellants had submitted their sales pattern, which included details of discounts and deductions claimed, as per the normal trade practice. The appellants argued that the deductions were based on circulars given to buyers, ensuring transparency in pricing.

Regarding the deductions claimed, the appellants cited a Supreme Court judgment regarding the permissibility of average freight deduction and subsequent clarifications. However, the JCDR relied on a recent Supreme Court judgment concerning various types of discounts claimed by another party. The JCDR argued against allowing certain deductions based on this latest judgment.

The Tribunal then analyzed each deduction claimed by the appellants. For Average Freight, the lower authorities had denied the claim, stating it was not in line with guidelines. However, the Tribunal found evidence supporting the appellants' claim that prices were FOR destination, allowing transportation expenses deductions. For Cash/Regular Payment Discount, the Tribunal accepted the claim, noting that the discount was known at the time of removal and permissible if actually passed on to customers. The Annual Turnover Bonus Discount claim was disallowed in light of a recent Supreme Court judgment disallowing similar bonuses. Finally, the deduction for Central Sales Tax was allowed as per clear provisions of the law.

In conclusion, the appeals were partly allowed, and the liability of the appellants was to be recalculated based on the allowed deductions.