1988 (11) TMI 214 - AT - Central Excise

Issues Involved:

1. Abatement of post-manufacturing expenses (PME) from the price lists.
2. Rejection of claimed deductions by the Assistant Collector.
3. Remand by the Collector of Central Excise (Appeals) for de novo adjudication.
4. Application of the Supreme Court judgment in Union of India v. Bombay Tyre International Ltd.
5. Methodology for calculating deductions (freight, taxes, discounts).

Detailed Analysis:

1. Abatement of Post-Manufacturing Expenses (PME):
The primary issue revolves around whether post-manufacturing expenses should be deducted from the assessable value of goods. The Assistant Collector initially rejected the abatement of PME from the price lists filed by the company, stating that these expenses should be included in the assessable value for tax purposes. However, the Assistant Collector allowed the cash discount to be deducted since it was ascertainable from the price lists.

2. Rejection of Claimed Deductions:
The Assistant Collector's order was challenged, and the Appellate Collector set aside the rejection of PME abatement. The department then sought a review, leading to a show cause notice proposing to restore the Assistant Collector's order. The company took the issue to the Calcutta High Court, which restrained the respondents from enforcing the demands and ordered provisional assessments based on the company's valuation, subject to furnishing a bond as required by Rule 9B of the Central Excise Rules, 1944.

3. Remand by the Collector of Central Excise (Appeals):
The Collector (Appeals) remanded the matter for de novo adjudication, noting that the Assistant Collector had not accepted the average figures for deductions claimed by the appellants. The Collector (Appeals) suggested that the abatement claims should be calculated on a product-wise and sale-unit basis, rather than an average basis, and noted that the Assistant Collector's rejection of the claims was harsh and irregular.

4. Application of Supreme Court Judgment in Union of India v. Bombay Tyre International Ltd.:
The High Court directed that the case be disposed of in accordance with the Supreme Court's decision in Union of India v. Bombay Tyre International Ltd., which allowed certain deductions from the assessable value. The appellants argued that their claims for deductions were in line with this judgment and should be allowed. The Supreme Court had laid down principles for such deductions, which the lower authorities acknowledged but struggled to apply due to practical complications.

5. Methodology for Calculating Deductions:
The central issue was how to calculate the deductions for freight, taxes, and discounts. The appellants proposed an average basis for freight and taxes, arguing that separate figures for each factory and commodity were impractical. They suggested allocating total freight costs to dutiable goods only, excluding exempted and non-excisable goods. The respondents argued for a more granular approach, suggesting separate calculations for each tariff item and commodity.

The tribunal concluded that deductions should be allowed on a pro-rata average basis for freight and transit insurance, considering the total transportation costs for both factories and allocating them to individual products based on weight and sale units. Taxes should also be averaged if actual allocation was impractical. Discounts and rebates should be claimed in the price lists, and their admissibility and time-bar aspects should be decided afresh by the Assistant Collector.

Conclusion:
The appeal was allowed by remand, directing the Assistant Collector to re-evaluate the deductions for freight, taxes, and discounts as per the principles laid down by the Supreme Court and the High Court's orders. The tribunal emphasized the need for a practical approach to ensure justice for both sides, acknowledging the complexities involved in the case.

← Previous Next →