1999 (5) TMI 200 - AT - Central Excise

Summary

Issues:
- Whether the abatement claimed by the respondents on account of dealer's commission is permissible deduction as sale commission under Rule 6(a) of the Central Excise (Valuation) Rules, 1975.
- Whether the commission paid by the respondents to their selling agents can be considered as a trade discount qualifying for deduction in arriving at the assessable value of goods.
- Whether the extended period for raising duty demand is invokable due to the respondents not informing the Department about changes in their sales pattern.
- Whether the dealer's margin comprising sales commission and after-sales service commission was adequately disclosed to the Department.
- Whether the deduction of retailer's margin to arrive at the normal price at which goods were sold in wholesale was admissible when the buyer was not a related person and the price was the sole consideration for the sale.

Analysis:
1. The Commissioner held that the abatement of 5% claimed by the respondents on account of dealer's commission was a permissible deduction as sale commission under Rule 6(a) of the Central Excise (Valuation) Rules, 1975. The Department contended that the commission paid to dealers cannot be considered a trade discount, citing a Supreme Court decision. They argued that the extended period for raising duty demand was applicable due to changes in sales patterns not being communicated.

2. The respondents argued that the deduction of retailer's margin to arrive at the normal price for wholesale sales was admissible under Rule 6(a) when the buyer was not a related person and the price was the sole consideration for the sale. They contended that the impugned order correctly applied the valuation rules.

3. The Department maintained that the goods were sold directly to customers without any deduction for sale commission, emphasizing the role of dealers as commission agents. They argued that the commission paid to dealers was for services rendered and not a trade discount for excise duty valuation purposes.

4. The respondents, represented by a Senior Advocate, highlighted that the goods were specialized, requiring after-sales service, and that the deduction from the retail price to arrive at the wholesale price was justified under Rule 6(a). They argued that the Department's reliance on a Supreme Court decision regarding commission agents was not applicable in this case.

5. The Tribunal found merit in the respondent's contentions, noting that the goods were only sold in retail during the material period. They upheld the abatement of 5% from the retail price to arrive at the wholesale price, rejecting the Department's argument against allowing the deduction.

6. The Tribunal rejected the Department's appeal, confirming the impugned order that allowed the abatement as permissible deduction under Rule 6(a). They also disposed of the Cross Objection filed by the respondents in favor of the respondent's contentions regarding the valuation of goods for excise duty purposes.