1991 (2) TMI 228 - AT - Central Excise

Summary

Issues Involved:
1. Deduction of turnover bonus.
2. Deduction of commission to selling agents.
3. Deduction of the cost of wooden crates, hoops, and nails used for packing.
4. Various types of trade discounts and rebates.

Issue-wise Detailed Analysis:

1. Deduction of Turnover Bonus:
The appellants argued that the turnover bonus was known to the dealers at the time of clearance, thus making it admissible as a deduction. They cited the Supreme Court's judgment in M.R.F. [1987 (27) E.L.T. 553 (SC)] to support their claim. The Department countered that the turnover bonus was given at the year-end only, making it an incentive rather than a bonus. The Tribunal concluded that the matter should be re-examined by the Asstt. Collector, allowing the appellants to present evidence to prove that the turnover bonus was known to the dealers at the time of clearance. If proven, the Asstt. Collector may grant the appropriate relief.

2. Deduction of Commission to Selling Agents:
The appellants accepted that commission, as such, cannot be allowed as a deduction from the sale price. However, they argued that in cases where sales were made to agents on a principal-to-principal basis, the commission should be treated as a discount. The Tribunal directed the Asstt. Collector to re-examine this claim. If the appellants can prove that sales to commission agents were made on a principal-to-principal basis, the discounts admissible to dealers should be granted, irrespective of the nomenclature used.

3. Deduction of Cost of Wooden Crates, Hoops, and Nails:
The Department argued that the cost of wooden crates, hoops, and nails used for packing should not be allowed as a deduction, citing that such packing was a regular feature necessary for marketing. The Tribunal upheld the Collector (Appeals) decision, noting that the packing was intended for the safety of the goods during transportation. The Tribunal emphasized that the packing was necessary to protect the steel files, which require protection due to their sharp edges and heavy nature.

4. Various Types of Trade Discounts and Rebates:
The Department contended that the various types of discounts and rebates allowed by the Collector (Appeals) should not have been granted, arguing that these discounts were not known to all buyers and were not uniformly applied. The Tribunal found that the appellants had consistently claimed these discounts and provided sufficient evidence to prove that the discounts were known to the buyers. The Tribunal upheld the Collector (Appeals) decision, noting that the Department did not provide sufficient evidence to counter the appellants' claims.

Conclusion:
The Tribunal allowed the appeals filed by the Company by remanding the issues of turnover bonus and commission to selling agents for re-examination by the Asstt. Collector. The Tribunal dismissed the appeals filed by Revenue, upholding the Collector (Appeals) decisions regarding the cost of wooden crates, hoops, and nails, and the various trade discounts and rebates.