1998 (3) TMI 394 - AT - Central Excise

Summary

Issues:
Assessable value of tractors sold directly to users in Karnataka, Collection of additional charges like Freight Reimbursement Charges (FRC) and Tax Suffered, Classification of buyers at depots, Inclusion of Tax Suffered amounts in assessable value, Validity of approved factory gate price.

Detailed Analysis:

The judgment concerns a dispute regarding the assessable value of tractors manufactured in Karnataka and sold directly to users, as well as those transferred to depots and sold from there. The appellant, engaged in tractor manufacturing, was found to have collected additional charges such as Freight Reimbursement Charges (FRC) and Tax Suffered amounts. The show cause notice alleged suppression of material facts and mis-declaration of value to evade duty based on these additional charges.

The appellant justified the collection of FRC as being for services provided to the transport agency during delivery. Additionally, the appellant collected amounts labeled as "Tax Suffered" from wholesale dealers for tractors sold from depots, citing differences in tax concessions between Tamil Nadu and Karnataka. The Collector of Central Excise accepted the contentions related to tax concessions for Tamil Nadu tractors sold outside the state but dropped the demand for duty on additional amounts collected for goods sold from depots.

The judgment emphasized that the approved factory gate price governed wholesale transactions, and any additional amounts collected for depot sales should not impact the approved price unless a separate class of buyers at depots was established. Since the department failed to demonstrate a distinct class of buyers at depots, demanding duty on prices higher than the approved factory gate prices was deemed unwarranted.

Furthermore, the court held that the amounts collected as "Tax Suffered" from buyers of Karnataka tractors at depots should not be included in the assessable value, as these buyers did not constitute a separate class distinct from wholesale buyers at the factory gate. Consequently, the appeal was dismissed, and the cross-objection was also rejected as merely supportive without merit.