1998 (5) TMI 130 - AT - Central Excise

Summary

Issues:
Dispute over deduction of equalised freight and equalised discount from the assessable value of Water Treatment Chemicals under sub-heading 3823.00 of the Central Excise Tariff Act, 1985 for the period from 6-10-1988 to 30-6-1989.

Analysis:
The dispute in the appeal centered around the price lists filed by the appellant firm during the specified period. The authorities disallowed the claim for deduction of equalised freight and equalised discount from the assessable value. The contention was that since the appellant firm sold goods at the factory gate in some instances without incurring freight, deduction for the same was not permissible. Similarly, the Department argued that as discounts were not uniform and varied, only the minimum discount should be allowed as deduction. The appellant's position was that they charged a fixed uniform price to buyers nationwide, irrespective of delivery location, and did not charge separate transportation costs. They claimed that the average transportation expenses should be deducted from the fixed prices. Regarding discounts, the firm stated that they offered varying discounts based on buyer status, market conditions, and quantity sold, and sought deduction based on the average discount offered.

The appellant firm initially claimed the average of freight and discount on an estimated basis from the price list, subject to adjustment after determining the actual amounts for the relevant year. After auditing their accounts, they obtained a Chartered Accountant Certificate for the actual freight and trade discount incurred, recalculated the excise duty payable, and adjusted the differential amount in their PLA after informing the Central Excise Authorities. The Tribunal noted the appellant's uniform pricing policy across India and cited a Supreme Court decision approving the deduction of average freight. The Tribunal disagreed with the adjudicating authority's reasoning that deduction of freight was impermissible when the factory gate price was ascertainable. They held that the appellant was entitled to the deduction for equalised freight.

Regarding the average discount claim, the Tribunal acknowledged that different discounts were offered to various parties. They emphasized that non-uniform discounts should not preclude deduction from the assessable value, as per established law. The Tribunal found no issue with the appellant's method of claiming deduction based on the average discount derived from actual discounts given. They concluded that this approach equated to the actual discount offered by the firm to customers. Consequently, the Tribunal allowed the deduction for the average discount. In light of these findings, the appeal was allowed, granting consequential reliefs to the appellants.