1992 (9) TMI 199 - AT - Central Excise

Summary

Issues:
1. Deduction of cost of special secondary packing
2. Handling expenses incurred in movement of finished goods to wholesale dealers
3. Remuneration to clearing and forwarding agents for handling of goods in transit and other incidental services
4. Bank charges for collection of sale proceeds

Analysis:

1. Deduction of cost of special secondary packing:
The dispute arose regarding the inclusion of the cost of corrugated boxes used for packing detergent cakes in the assessable value of goods under Section 4 of the Central Excises & Salt Act, 1944. The original authority held that the cost should not be excluded, while the lower appellate authority disagreed, citing a Bombay High Court decision. The Tribunal referred to the judgment in the case of Kusum Products Ltd. and the Supreme Court ruling in Ponds India Ltd. to determine the necessity of the corrugated boxes for selling goods in the wholesale market. Following the principles established in these cases, the Tribunal directed the Assistant Collector to ascertain whether the packing in corrugated boxes was necessary for selling goods in the wholesale market at the factory gate.

2. Handling expenses and remuneration to agents:
The original authority considered these expenses as post-manufacturing expenses, forming part of the value of goods. However, the lower appellate authority allowed these deductions subject to the production of proof. The learned JDR for the Revenue relied on various judgments to argue against these deductions, while the Advocate for the respondents cited relevant cases supporting the admissibility of these deductions. Referring to the judgment in the case of Tungbhadra Industries, the Tribunal held that these charges would not form part of the value of the goods.

3. Bank charges for collection of sale proceeds:
The original authority viewed bank charges as post-manufacturing expenses, thus includible in the assessable value. In contrast, the lower appellate authority held otherwise if they were identifiable. The Tribunal analyzed Section 4(1)(a) of the Act, emphasizing that bank charges incurred for realizing sale proceeds do not form part of the value of goods. Drawing an analogy to a previous judgment, the Tribunal concluded that bank charges should not be included in the value of goods under Section 4(1)(a) of the Act.

In conclusion, the Tribunal disposed of the appeals based on the above analysis, providing detailed reasoning for each issue raised by the parties involved in the case.