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TMI Blog1989 (1) TMI 227X X X X Extracts X X X X X X X X Extracts X X X X ..... common consideration of the 3 appeals and commenced hearings in the 2 appeals of the department. Because of the acute shortage of Judicial Members in the Tribunal at Delhi, the hearings in the two appeals of the department could not progress much. They have not yet been concluded. In the meanwhile, since heavy revenue stakes were involved, the Ld. Representative of the department moved an application to de-link the present appeal of the appellants from the two subsequent appeals of the department and issue the judgment as early as possible. The Bench considered this application in chamber and, in view of the remote possibility of concluding the hearings in the department's subsequent appeals in the near future because of the continuing shortage of Judicial Members, accepted the request of the Ld. Representative of the department. Accordingly, this judgment is being given in the appeal No. E/1556/86-A of the appellants and the Misc. Application aforesaid in which the hearing was concluded on 14-9-1988. 3. The Misc. Application aforesaid is for admission of additional documents. During the hearing of the appeal, actually both sides brought fresh evidence on record. Since the fresh e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e wholesale sales and hence normal price under Section 4(1) (a) was ascertainable. The appellants complained that the Collector (Appeals) adopted this proposition without putting it to them and without hearing their explanation on it. However, the appellants stated categorically that they did not want a remand of the matter to the Collector (Appeals) for that reason. They, therefore, waived their plea of alleged violation of principles of natural justice by the Collector (Appeals). 7. The appellants' proposition is that there were no wholesale sales and since all the sales were only retail sales, they were entitled to deduction of the retailing expenses in terms of Rule 6(a) of the Central Excise (Valuation) Rules, 1975. The appeallants desired that the Tribunal should record a finding whether there were wholesale sales or only retail sales and then remand the matter to the Assistant Collector for determining the amount of deduction to be allowed under Rule 6(a). 8. The Ld. Representative of the department put forth three propositions :- (i) sale of even one machine to a direct customer was also a wholesale sale; (ii) sales to leasing companies were in any case wholesale sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it was a retail sale and the price of Rs. 1,33,500/- charged for it was a retail price. 11. Coming to the second proposition of the department, the appellants do not dispute that invoicing of the machines to leasing companies was technically a sale and since such leasing companies were themselves not users of such machines, such sale could be considered a wholesale sale as well. The point made by the appellants, however, is that invoicing of the machines to leasing companies did not amount to a wholesale sale as envisaged in Section 4(l)(a) of the Act. As between the appellants and the leasing company, the invoice price was not the sole consideration for the sale. Leasing was only a financing arrangement. The leasing company was interested in 14½% or so return on the loan advanced by it to the appellants. The appellants were interested to see that their own capital was not blocked in respect of the machines given on hire purchase. The leasing company was really not interested in buying and selling the machines. In such an arrangement, the price shown in the invoice issued by the appellants to the leasing company was only of an academic interest. The invoice price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esale trade to a person other than a related person. Provided that in determining the amount of reduction, due regard shall be had to the nature of excisable goods, the trade practice in that commodity and other relevant factors." The appellants marketed their Photo-copiers in the country through their 7 regional offices and 22 branches. The retail price of Rs. 1,33,500/- (installed cost at customers' premises) included the Central Excise Duty and various post-removal expenses, such as freight ex-Rampur works to customers' premises and installation cost. The appellants have claimed total retailing expenses of Rs. 39,005/- per machine (or dealer's margin per machine) which they want to be deducted from their retail price in addition to the Central Excise Duty. The Ld. Representative of the department states that the amount claimed by the appellants is highly inflated and that the deduction should be of no more than 10-11% of the retail price as in the case of the comparable machine CANON NP-271 of M/s. BEE Electronic Machines Pvt. Ltd. In addition, the appellants may be allowed deduction of cost of transport from the factory gate to the customers' premises on actual basis after due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that event the retail price is bound to go up because, as is common knowledge, the local taxes are normally extra and are charged over and above the price. Right now, the appellants do not pay the local taxes and there cannot therefore, be any deduction of them from the existing retail price. 15. The Ld. Representative of the department is right in saying that the dealers margin is the difference between the dealer's purchase price and his sale price. On this basis, he pleaded for a deduction of 11.6% or so being given from the retail price of the appellants as well. But we find that in two respects the dealers margin of 11.6% given in the CANON'S break-up in paragraph 13 above has unduly been depressed. One is the cost for installation. Since in CANON'S case the installation cost was being incurred by the dealers, this cost of Rs.l,500/-per machine should really be added to the dealer s margin. Second is the interest on 60 days' credit. The basic price of CANON to the dealer was on 60 days' credit basis. The interest at prevailing bank rate should, therefore, be deducted to arrive at the cash price. If these two elements are added to the dealer s margin in the case of CANON, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances, and particularly keeping in view the sophisticated nature of the Photo-copier machine before us and the net-work of branch offices, show-rooms, and mobile skilled labour required for its marketing, installation and servicing and the prevalent average dealer's margin for comparable goods, we feel that a margin of 15% over the gross retail price should be allowed by way of retailing expenses or dealer's margin under Rule 6(a) of the Central Excise (Valuation) Rules, 1975. We allow this 15% margin over the appellants' retail price of Rs. 1,33,500/-. Central Excise Duty and other taxes, if paid, would also be deductible. As regards freight from the factory gate to the customers' premises, in principle it is deductible. But we presume that the cost of freight already stood included in the expenses for installation (Rs. 1,500/- per machine) for CANON and so we have already taken it into account in arriving at the dealer's margin of 15%. No further deduction by way of freight would, therefore, be necessary.
19. In the result, we allow this appeal partly in the above terms. Consequential relief should be granted to the appellants. X X X X Extracts X X X X X X X X Extracts X X X X
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