1988 (3) TMI 297 - AT - Central Excise

Summary

Issues:
- Determination of assessable value of goods manufactured by the appellants based on the relationship with their distributor.

Analysis:
1. Background and Dispute: The case revolves around the assessable value of Eddy Current Clutches manufactured by the appellants, who appointed M/s. Greaves Cotton & Co. Ltd. as their sole distributor. The dispute arises from whether M/s. Greaves Cotton & Co. Ltd. should be considered a related person of the appellants under the Central Excises and Salt Act, 1944, affecting the deduction of a 20% discount given by the appellants to the distributor.

2. Arguments and Considerations: The appellants contended that since both companies were limited companies and did not hold shares in each other, there was no basis for considering them as related persons. They highlighted that the clauses in the agreement with the distributor were standard business practices and should not be grounds for disallowing the discount. The appellants were willing to include the money value of any additional consideration in the assessable value as per Rule 5 of the Central Excises (Valuation) Rules, 1975.

3. Judgment and Ruling: The tribunal held that M/s. Greaves Cotton & Co. Ltd. was not a related person of the appellants. However, it was determined that the price paid by the distributor was not the sole consideration for the sale, necessitating the addition of the money value of any additional consideration to the sale price for determining the assessable value of the goods. The impugned orders were set aside, and the matter was remanded to the Assistant Collector for reassessment based on the added consideration.

4. Remand Proceedings: To expedite the remand proceedings due to the appellants' company being in the process of winding up, the tribunal directed the appellants to provide detailed expenditure particulars incurred by the distributor on advertisement, sales promotion, and after-sale service during the warranty period. This information, supported by a Cost Accountant's Certificate, was to be submitted within a month, following which the Assistant Collector was to re-determine the assessable values within three months.

In conclusion, the judgment clarified the relationship between the appellants and their distributor, emphasizing the need to consider additional considerations beyond the sale price in determining the assessable value of goods. The remand proceedings were ordered to ensure a thorough reassessment based on the provided expenditure details.