1994 (9) TMI 169 - AT - Central Excise

Summary

Issues:
1. Determination of wholesale price from the retail price for excisable goods.
2. Inclusion of packing charges in the assessable value.
3. Admissibility of discounts in the valuation of goods.

Analysis:

Issue 1: Determination of Wholesale Price
The appeal challenged the order of the Collector of Central Excise (Appeals) regarding the disallowance of deductions claimed by the appellants on various costs in the price lists of office machines and computers. The appellants contended that the Assistant Collector recognized their direct sales to customers and directed the filing of price lists accordingly. They argued that deductions from the retail price should be granted to arrive at the wholesale price, as per Rule 6(a) of the Valuation Rules. The Tribunal noted the need to determine reasonable deductions from the retail price to establish the notional wholesale price. The Ministry of Finance's instructions clarified the methodology for such deductions, emphasizing the need to align the net value with wholesale prices. The Tribunal directed the Assistant Collector to reevaluate the assessable value by deducting suitable amounts from the retail price, as done in subsequent price lists.

Issue 2: Inclusion of Packing Charges
Regarding the inclusion of packing charges in the assessable value, the Collector (Appeals) disallowed it, stating that even if customers paid for packing, it should be included. The appellants argued that additional packing at customer's request for safe transport should not be included. The Supreme Court precedent established that packing necessary to make goods marketable should be included in the value. The Tribunal emphasized that the Assistant Collector should determine the necessity of the packing based on facts and the purpose of the packing. The issue was remanded to the Assistant Collector for a detailed assessment based on the Supreme Court's guidelines.

Issue 3: Admissibility of Discounts
The Supreme Court clarified that trade discounts should be allowed if established under agreements, terms of sale, or trade practices known before goods' removal. The Assistant Collector was advised to consider this clarification while reassessing the assessable value. The appeal was remanded to the Assistant Collector for a fresh determination of the assessable value in line with the discussions and legal principles highlighted in the judgment.

In conclusion, the Tribunal addressed the issues of determining wholesale price, inclusion of packing charges, and admissibility of discounts, providing detailed guidance for reassessment by the Assistant Collector based on legal precedents and statutory rules.