1987 (1) TMI 250 - AT - Central Excise

Issues Involved:
1. Liability of duty on selling expenses included in the sale price of art silk fabrics.
2. Whether "incentive to customers" and "rebate to customers" qualify as trade discounts.
3. Validity of filing refund claims without appealing against the approved price-list.
4. Whether the refund claims can be considered based on deductions from declared values on account of trade discounts.
5. Whether the case should be remanded to the original authority for fresh consideration.

Detailed Analysis:

1. Liability of Duty on Selling Expenses:
The appellant argued that selling expenses, including salary & wages, advertisement expenses, bank charges, business promotion expenses, travelling expenses, commission to selling agents, brokerage to selling agents, incentive to customers, and rebate to customers, were not liable to duty. They relied on the Supreme Court judgment in A.K. Roy v. Voltas Ltd., which stated that excise duty is leviable only on the manufacturing cost plus manufacturing profit. However, the lower authorities did not accept this contention.

2. Incentive and Rebate as Trade Discounts:
The appellants restricted their claim to "incentive to customers" and "rebate to customers," asserting these as trade discounts. They cited the Supreme Court's clarification in Union of India v. Bombay Tyre International Ltd., which allowed trade discounts as permissible deductions. The Tribunal noted that the facts of the Orient General Industries case, where special incentive bonuses were not considered valid trade discounts, were not the same as this case. Therefore, the Tribunal held that the original authority should determine if the claimed discounts fall within the principles laid down by the Supreme Court.

3. Validity of Filing Refund Claims Without Appealing Against Approved Price-List:
The Tribunal considered whether the appellants could file refund claims without contesting the approved price-list. The learned advocate for the appellants cited the Karnataka High Court's judgment in Shyam Sunder U. Nichani v. Assistant Collector of Central Excise, which held that provisions of Section 11B (Rule 173-J read with Rule 11) apply even if the price-list had been approved at a higher value. The Tribunal agreed that there is no bar to filing a refund claim under Rule 173J read with Rule 11B, even if the decision regarding the rate of duty or value is not contested in appeal.

4. Consideration of Refund Claims Based on Trade Discounts:
The President of the Tribunal noted that the appellants had not specified the points of difference, which led to a reformulation of the questions. The primary question was whether the refund claims could be considered based on deductions from declared values on account of trade discounts. The President observed that neither the price-list form nor the manner in which it was filled in was satisfactory. Despite the appellants' arguments, the President agreed with Member Shri Murthy that the appellants could not set up a new case inconsistent with the original declaration in the price-lists.

5. Remanding the Case for Fresh Consideration:
The President concluded that there was no purpose in a remand, as the appellants' declarations in the price-lists did not indicate approval was sought for allowing specified quantitative trade discounts. The President also noted that the appellants' claim for refund based on "selling expenses" did not include a valid trade discount. Therefore, the appeals were dismissed.

Conclusion:
The Tribunal dismissed the appeals, holding that the appellants could not claim refunds based on trade discounts not specified in the original price-lists, and there was no need to remand the case for fresh consideration.

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