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TMI Blog1993 (7) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... the price lists filed, the appellants on their own, worked out and declared assessable values after deducting amounts towards what they considered their post-manufacturing expenses and selling profits. 4. The Assistant Collector, Central Excise, Vijayawada disallowed their claim for deduction of the so-called post-manufacturing expenses, and the so-called selling profits. 5. After the publication of the judgment of the Hon ble Supreme Court in the case - Union of India v. Bombay Tyres International Ltd. 1983 (17) E.L.T. 329 (S.C.), the appellants dropped their claim for distribution expenses (except freight, which had been included in the distribution expenses), and advertisement expenses. 6. The price lists were finally approved in 1984 in the light of the judgment of the Hon ble Supreme Court in the case of Union of India v. Bombay Tyres International Ltd. The Assistant Collector, Central Excise while finalising the price list allowed abatement of freight expenses but disallowed other abatement claims which the appellants have claimed to be the post-manufacturing expenses and the selling profits. 7. On appeal, the Collector, Central Excise (Appeals), Madras noted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Mitra, Advocate appeared for the appellants. The respondents were represented by Shri Prabhat Kumar, S.D.R. 10. Shri S. Ganesh, the learned Advocate at the outset stated that there were 3 appeals before the Tribunal for their decision and all the 3 appeals, involved common issues. In appeal No. 1357 exactly the same issues as in appeal No. 1355 were involved. In appeal No. 1356, 3 items not common with other two appeals were (1) servicing charges (2) rental charges for bottles and crates and (3) Packing charges. 11. He dealt with the proceedings before the Andhra Pradesh High Court and the Supreme Court, and stated that they had claimed a series of deductions at different stages of these proceedings. 12. In brief, they have claimed the following deductions from their wholesale prices :- (a) Breakages of glass bottles and repair of wooden crates. He referred to the decision of the Tribunal in the case of Real Drinks Pvt. Ltd. v. Collector, Central Excise, 1991 (54) E.L.T. 436 (Tribunal), and the unreported decision in the case of Goa Bottling Company Pvt. Ltd. v. Collector, Central Excise, Goa, order No. E/14/1993-D, dated 11-1-1993 since reported in 1993 (67) E.L.T. 721 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of the case and have given our careful consideration to the arguments advanced on both the sides. 17. The points for our consideration are the following :- (1) Deduction from the declared prices, of the expenses incurred towards (a) breakages of glass bottles/wooden crates; (b) Repairs of the wooden crates; (c) Service charges and rental charges for empty bottles and wooden crates, (2) Deduction from the declared prices of the (a) Bank interest on the sums borrowed for purchase of material and (b) office expenses, administrative expenditure, and (3) Free supply of bottles by way of trade discount; 18. The appellants had filed their price lists in Part-1 of the proforma for determination of value under Section 4 of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act ). Price lists in Part-1 are filed for prices of excisable goods for sale by the assessee to buyers (not being related persons) in the course of wholesale trade - Section 4(l)(a) of the Act - the main definition clause. 19. The normal price mentioned in Section 4(l)(a) of the Act is the price at which the goods are ordinarily sold by the assessee in the course of wholesale trad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relate to the sale transactions effected by the manufacturer but to those pertaining to the subsequent sale transactions effected by the wholesale buyer in favour of other dealers. 25. The claims to various deductions have been dealt with by the Hon ble Supreme Court, where the excisable article or an article of the like kind and quality is not sold in wholesale trade at the place of removal that is at the factory gate but is sold in the wholesale trade at a place outside the factory gate (para 26). 26. It was held that where the sale is effected at the factory gate, expenses incurred by the assessee upto the date of delivery on account of storage charges, outward handling charges, interest on inventories (stocks carried by the manufacturer after clearance), charges for other services after delivery to the buyer, namely after-sale service and marketing and selling organisation expenses including advertisement expenses, cannot be deducted. 27. The Hon ble Supreme Court in their judgment in the case of Bombay Tyres International (supra) referred to their earlier decision in the case of Atic Industries Ltd. v. Assistant Collector, Central Excise, 1978 (2) E.L.T. J 444 wherei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... packing in which the goods have earlier been removed. 33. Regarding the breakages of glass bottles and repairs of wooden crates the appellants have referred to the decision of the Tribunal in the case of Real Drinks Pvt. Ltd. v. Collector, Central Excise, 1991 (54) E.L.T. 436 (Tribunal). 34. The Tribunal in that case had observed that if a deduction is permissible to the assessee under the law on the basis of the real nature of the cost then there was no reason as to why it should not be permitted. They held that the deduction towards replacement of bottles and replacement, repair of crates was a permissible deduction. 35. In that case no valuation issue was involved. It was a matter of claiming the exemption under Notification No. 148/82-C.E., dated 22-4-1982 (as amended), and mis-declaration of turnover and limit of clearance in a financial year for entitlement to the benefit of small scale exemption, and was decided by Special Bench D of the Tribunal. 36. Reliance has also been placed on the Tribunal s decision in the case of Goa Bottling Company Pvt. Ltd. v. Collector, Central Excise, Goa - Order No. E/14/1993-D, dated 11-1-1993. 37. In that case also, decided by Sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 45. A point has also been made that glass bottles sealed with lid made of tin should be considered as metal containers for the purposes of Notification No. 34/83-C.E., dated 1-3-1983. Glass bottles with crown cap, called a tin cap, could not be considered as metal containers. Cap itself is not a container. It cannot contain the liquid. Liquid is contained in the glass bottle which is not a metal container. 46. 1(c) Service charges and rental charges for empty bottles and wooden crates. The appellants had submitted that Rs. 2.50 was charged per crate towards rentals/servicing charges from the dealers when the goods were crated for transport of Maza mango bottles to their premises, for using them till they were returned. The cost of these crates had not been included in the declared prices. It is not clear that when even the cost of crates was not included, how rental/servicing charges in respect of such crates, were included in the declared prices. 47. The appellants themselves have stated that the rental/servicing charges were extraneous element and unconnected with the assessment of excisable article in question. In view of this it needs consideration that how this elem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ady excluded), could be further excluded from the assessable value. 56. It is seen from the price lists that the cost of these packing had not been declared, and it has not been included in the prices at which the goods were ordinarily sold in the course of wholesale trade. No deduction from the prices could be on notional basis. As observed by the Hon ble Supreme Court in the case of Bombay Tyres International (para 38) whether any further deductions can .be claimed beyond those already mentioned in the statute will depend on the nature of those claims in the case of a particular assessee. 57. Sums borrowed from the Banks are in the nature of working capital and the purpose was the collection of capital for manufacturing activities. Without bottles, aerated water could not be sold. Without crates glass bottles could not be transported even upto the factory gate. Loan from the Banks for such activities could not be considered for any other than the manufacturing activity. They were not for any ancillary or incidental activity, not connected with the activity of manufacture, but for the ancillary or incidential activity of manufacture in the manner as referred to by the Hono ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose exclusion has been claimed by them had nothing to do with the manufacture of excisable products. It has, however, not been clarified by them as how without these administrative arrangements the excisable goods could be produced and could be put for sale at the factory gate. 65. (3) Trade Discount:- The appellants have submitted that they were giving free coupons to their dealers which could be exchanged with its products at the rate of one crate per coupon. Admittedly, there was no mention of these coupons in the invoices. No discount as such was given at the time of the clearance. Full price was charged of the goods cleared. 66. There is no details of the scheme. There is no evidence about the contingency depending upon, the scheme was available. It was not possible to determine the quantum of discount in advance as it was not based on any tangible or identifiable criteria. 67. A Trade Discount is a deduction from the declared price of goods allowed to the buyer by the manufacturer. Every discount, however, is not a trade discount for the purposes of Section 4 of the Act. 68. A quantitative discount is available on the purchase of a specified quantity within a stipulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the case - AIMS Oxygen Pvt. Ltd., Baroda v. Collector, Central Excise, Baroda, 1985 (36) E.L.T. 151 (Tribunal), it has been held that expenses actually incurred by the appellants on permissible deductions alone would be excludible and any excess recoveries from customers would be considered as part of the appellant s price realisation (Para 8). 79. Section 4 of the Act lays down that the assessable value should be the normal price at which the goods are ordinarily sold by the assessee in the course of wholesale trade. Thus, the normal prices charged will have to form the basis for arriving at the assessable value. Supply in bottles/crates is the normal activity for supply of the aerated water. Their cost had already been separated from their normal price. In the circumstances, the question of any deduction from the normal price does not arise. 80. Even if any specific charges are eligible for deduction per se, deduction has to be of a specific charge and of a specific amount. It is for the manufacturer to claim such deduction at the time of seeking approval of prices as per law, and to produce evidence in support of his claim. 81. In the case before us, we find that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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