1987 (12) TMI 243 - AT - Central Excise

Summary

Issues:
- Disallowance of deduction claimed by the assessee
- Assessment based on wholesale price or retail price
- Validity of dealer's commission as part of assessable value

Analysis:
1. The case involved an appeal by the Collector of Central Excise, Chandigarh against an order passed by the Collector (Appeals), Central Excise, New Delhi. The dispute arose from the deduction of Rs. 5,000 per vehicle claimed by M/s. Swaraj Mazda Ltd. as territorial dealer's commission. The Assistant Collector disallowed the deduction, while the Collector (Appeals) allowed it based on the wholesale price declared by the assessee.

2. The appellant contended that the transactions with dealers and customers were wholesale, and hence, dealer's commission should not be allowed. The respondent argued that the sales were retail as they were made to direct users, supporting their stance with relevant case laws. The Tribunal noted the changing contentions of the assessee regarding the claimed deduction of Rs. 5,000.

3. The Tribunal observed that there was no agreement with the dealer for the remaining Rs. 4,200, and territorial dealer's commission is not a permissible deduction under Section 4 of the Central Excises and Salt Act. The genuineness of the claimed deduction was questioned, especially considering the shifting stance of the assessee regarding the Rs. 800 component of the deduction.

4. Referring to relevant case laws, the Tribunal emphasized that after-sale services, marketing expenses, and dealer commissions are not deductible unless specifically allowed by law. The Tribunal highlighted the distinction between a discount and a commission, noting that commissions for services rendered are not deductible as discounts. In light of these considerations, the Tribunal allowed the appeal filed by the Collector of Central Excise, Chandigarh.

5. The decision highlighted the legal principles governing the determination of assessable value in excise matters, emphasizing the need for adherence to statutory provisions and established case law precedents. The judgment underscored the importance of consistency in claims made by taxpayers and the necessity for deductions to be in line with legal requirements to avoid disallowance.