1996 (8) TMI 197 - AT - Central Excise

Summary

Issues Involved:
1. Inclusion of secondary packing costs in the assessable value.
2. Deductibility of commission paid to consignee distributors.
3. Deductibility of handling charges.
4. Different prices to buyers in different zones.

Detailed Analysis:

1. Inclusion of Secondary Packing Costs in the Assessable Value:
The core issue is whether the cost of secondary packing (gunny/HDPE bags and cartons/boxes) should be included in the assessable value of detergent washing powder and detergent cakes. The Tribunal held that the cost of secondary packing is includible in the assessable value if it is necessary for putting the excisable article in the condition in which it is generally sold in the wholesale market at the factory gate. The Tribunal referenced the Supreme Court's decisions, particularly the case of *U.O.I. v. Bombay Tyre International Ltd.*, which stated that secondary packing necessary for wholesale trade is includible in the value. The Tribunal found that the secondary packing in this case was essential for the wholesale trade and not durable or returnable, thus includible in the assessable value.

2. Deductibility of Commission Paid to Consignee Distributors:
The Tribunal examined whether the commission paid to consignee distributors could be deducted from the assessable value. The Tribunal concluded that the consignee distributors acted as agents of the manufacturers, and the sale proceeds flowed back to the manufacturers. Citing the Supreme Court's decision in *Coromandel Fertilizers Ltd. v. U.O.I.*, the Tribunal held that such commission is not a trade discount and is not deductible from the assessable value. The agreements between the manufacturers and the consignee distributors clearly indicated an agency relationship, thus reinforcing this conclusion.

3. Deductibility of Handling Charges:
The Tribunal addressed whether handling charges (loading and unloading) could be deducted from the assessable value. The Tribunal clarified that expenses incurred inside the factory gate are part of the value of the goods, while expenses incurred outside the factory gate are deductible. The Tribunal referenced the Supreme Court's decision in *Indian Oxygen Ltd. v. C.C.E.*, which held that loading charges within the factory are includible in the assessable value. However, handling charges incurred outside the factory gate, if part of the transportation cost, are deductible. The Tribunal modified the Collector's order to allow the deduction of handling charges incurred outside the factory gate based on actual evidence.

4. Different Prices to Buyers in Different Zones:
The Tribunal also examined the issue of different prices charged to buyers in different zones. It referred to its decision in *Jagdish Electronics Pvt. Ltd. v. C.C.E.*, which recognized that different buyers situated at different places could constitute separate classes of buyers, and separate prices charged from them are in conformity with Section 4(1)(a) of the Central Excises & Salt Act, 1944. The Tribunal found the Collector's view on this issue incorrect.

Conclusion:
The Tribunal allowed the appeals of the Revenue regarding the inclusion of secondary packing costs in the assessable value, upheld the non-deductibility of commission paid to consignee distributors, and modified the order regarding the deductibility of handling charges incurred outside the factory gate. It also found the Collector's view on different prices to buyers in different zones incorrect. All nine appeals were disposed of in these terms.