1997 (3) TMI 281 - AT - Central Excise

Summary

Issues:
Abatement to be allowed from the sale price of the principal; Interpretation of Notification 305/77 for excise duty assessment; Allowance of abatements for interest on receivables, turnover tax, and equalized freight; Treatment of manufacturers under Notification 305/77; Discrepancy in abatement allowance among different Collectorates.

Analysis:
The appeal before the Appellate Tribunal CEGAT, Madras revolves around the abatement to be allowed from the sale price of the principal, M/s. Hindustan Lever Ltd. The appellants had manufactured goods for M/s. HLL on a job work basis within the parameters of Notification 305/77. The appellants argued that while they had no objection to the duty being assessed based on M/s. HLL's sale price, they contended that certain abatements under Section 4(4)(d)(ii) had not been granted to them, specifically for interest on receivables, turnover tax, and equalized freight.

The appellant's counsel relied on judgments by the Hon'ble Supreme Court in the cases of Bombay Tyre International and MRF Ltd. to support their claim for abatements. They argued that the lower authority did not consider the MRF judgment, which allowed abatement for interest on receivables and turnover tax. Regarding equalized freight, they cited the Bombay Tyre International case where the court ruled in favor of allowing the abatement. The appellant contended that since M/s. HLL was considered the manufacturer for duty payment under Notification 305/77, the benefits available to a manufacturer should also be extended to them.

The Tribunal noted discrepancies in abatement allowance practices among different Collectorates, with the Madras Collectorate allowing the abatements claimed while the Hyderabad Collectorate did not. The Tribunal observed that Notification 305/77 was issued to address uncertainties regarding who would be considered the manufacturer in job work scenarios, allowing the person getting goods manufactured on their account to facilitate excise levy operations by the job worker. The Tribunal emphasized that the assessable sale price of M/s. HLL was adopted based on this notification.

In its decision, the Tribunal held that the appellants were entitled to the abatements claimed for interest on receivables, turnover tax, and equalized freight, subject to verification by the authorities. The Tribunal directed the matter to be remanded to the original authority for value determination based on the observations made. Ultimately, the appeal was allowed by remand, granting the appellants the abatements in question.