1999 (4) TMI 406 - AT - Central Excise

Summary

Issues Involved:
1. Whether the cash discount given by the appellants to their wholesale dealers in the form of a bonus is entitled to be deducted from the assessable value.
2. Whether the cost of secondary packing in the form of wooden boxes is entitled to be deducted from the assessable value.

Issue-wise Detailed Analysis:

1. Cash Discount Deduction:

The appellants sought to deduct cash discounts given to wholesale dealers from the assessable value of torches and batteries. They argued that these discounts, termed as bonuses, should be allowed as deductions based on a Supreme Court decision (1984 (17) E.L.T. 329 (S.C.)). The appellants claimed that the discount was determined from the Profit & Loss Account and Annual Balance Sheet and did not need to be known prior to the removal of goods from the factory.

However, the Tribunal found that for a discount to be deductible from the assessable value, it must be known to the wholesale dealers at the time of sale. The appellants failed to provide evidence that their dealers were aware of the discount terms and conditions at the time of sale. Consequently, the Tribunal rejected the appellants' plea for cash discount deduction, citing the lack of clear terms and conditions communicated to the dealers.

2. Cost of Secondary Packing Deduction:

The appellants claimed deductions for the cost of wooden boxes used for packing torches and batteries, arguing that these were necessary for safe transportation. They relied on the Supreme Court judgment in Geep Industrial Syndicate v. Union of India (1992 (61) E.L.T. 328 (S.C.)), which held that the cost of wooden boxes used for packing was not includible in the assessable value of torches and batteries.

The Tribunal noted that the appellants did not have factory gate sales, and all sales were made from depots. The torches were primarily wrapped in polythene and packed in cartons before being transported to depots. From there, 40% of sales were made in cartons, while the rest were packed in wooden boxes for outstation sales. The Tribunal found that wooden boxes were not necessary for putting the goods in the wholesale market but were used for protecting goods during transportation.

The Tribunal's majority decision, however, differed. One member (P.C. Jain) argued that the appellants did not provide sufficient evidence to prove that wooden packing was not necessary for putting the goods in the wholesale market. He emphasized that the burden of proof was on the appellants to establish that wooden packing was not required. The third member (G.R. Sharma) agreed with this view, citing that a uniform price was charged regardless of whether goods were packed in wooden boxes or not, indicating that wooden packing was not optional but a standard practice.

Final Order:

In view of the majority decision, the Tribunal concluded that the packing charges for wooden boxes are includible in the assessable value of torches. Consequently, the appeal was dismissed.