1992 (1) TMI 237 - AT - Central Excise

Summary

Issues:
Deduction of trade discount and freight from the price.

Analysis:
The dispute in this case revolves around the deduction of trade discount and freight from the price. The appellants, who manufacture asbestos cement products, had filed a price list under Pt. I, which was approved by the Assistant Collector without allowing the claimed deduction of trade discount and freight from the price. The appellants appealed this decision, which was dismissed by the Collector, leading to an appeal to the Tribunal. The Tribunal initially disposed of the appeal as not maintainable, but a writ petition in the Calcutta High Court directed the Tribunal to reconsider the appeal on merits.

The main contention of the appellants was that they were entitled to a deduction of trade discount and freight as per the declared discounts in the price list and contracts with stockists/dealers. They argued that the discounts were a normal practice at the time of goods removal and were well-known to buyers. The appellants claimed that the practice of issuing credit notes for trade discounts did not affect their right to claim deductions, citing relevant decisions of the High Court and Supreme Court.

The Collector had rejected the appellants' claims, stating that issuing trade discounts via credit notes did not comply with the provisions of the Central Excises and Salt Act, 1944. However, the appellants, relying on the judgment in Bombay Tyres International Pvt. Ltd., argued that they were entitled to the deductions. The Tribunal, considering the judgments presented, allowed the claim for deduction of trade discount given through credit notes, as per the Supreme Court's clarificatory order.

Regarding the deduction of freight, the Collector had disallowed it, stating that the price list under Part I already included transportation costs. However, the Tribunal, following the judgment in Bombay Tyres International, held that the appellants were entitled to deduct equalized freight from the assessable value. Therefore, the Tribunal set aside the Collector's order and allowed the appeal, granting the deduction of both trade discount and freight from the price.