2000 (8) TMI 452 - AT - Central Excise

Summary

Issues:
1. Valuation of ice cream manufactured by the appellants with varying discounts for different zones.
2. Assessment of security deposit taken by the appellants from wholesale dealers for deep freezer cabinets.

Issue 1 - Valuation of Ice Cream:
The dispute in this case revolves around the valuation of ice cream manufactured by the appellants, particularly concerning the discounts offered to wholesale dealers in different zones. The appellants provided a higher discount of 35% to two buyers in Delhi, while offering varying discounts of 10% to 25% to buyers in other zones. The impugned orders disallowed the higher discount given to the Delhi buyers, alleging a relationship between them and the manufacturer as the reason for the increased discount. The appellants argued that there was no legal basis for restricting the discount to 10% for the Delhi buyers, especially since they were the largest purchasers of the appellants' products. The Tribunal agreed with the appellants, holding that the 25% discount should be allowed for sales to the Delhi buyers, as there was no justification for denying them the same discount given to unrelated buyers in other zones.

Issue 2 - Assessment of Security Deposit:
The second issue raised in the appeal pertained to the security deposit taken by the appellants from wholesale dealers to whom they supplied deep freezer cabinets. The impugned order deemed this security deposit as conferring an advantage on the appellants, subjecting it to excise duty based on a Supreme Court decision. The appellants contended that the supply of deep freezers and the security deposit collection were separate from their ice cream manufacturing and sales activities. They argued that there was no evidence to show that the security deposit was linked to the price of ice cream. The Tribunal agreed with the appellants, ruling that the security deposit should not be subjected to excise duty as it was not utilized as a means to recover additional amounts related to the ice cream sales.

In conclusion, the Tribunal allowed the appeal in favor of the appellants on both issues. They directed that the 25% discount should be permitted for sales to the Delhi buyers and that the security deposit taken from wholesale dealers should not be liable for excise duty.