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TMI Blog1994 (2) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... the duty correctly leviable. 3. In place of replying to the show cause notice the appellant filed a writ petition in the Bombay High Court. The Hon ble Bombay High Court, however, rejected the writ petition, inter alia on the ground that the facts were disputed. 4.The Collector, Central Excise, Pune who adjudicated the matter under his order-in-original dated 29-2-1988 observed that :- (1) the assessees were not eligible for the deductions on account of that portion of normal trade discount as described by the assessee, to the extend of 2% of the discount attributable to after sale services etc. incurred by the dealers on behalf of the assessee ; (2)for the non-recoverable taxes, surcharge and octroi, the demand was liable to be modified. The period prior to 1-10-1984 was not taken into account, and the duty was worked out for the remaining period of 1984-85 on pro rata basis ; (3)the freight averaged by the assessee and claimed as deduction was to be allowed ; (4) the deduction on account of transit insurance was allowable as a deduction. 5. The total duty of Rs. 7496623.80 was confirmed, and a penalty of Rs. 37 lakhs was imposed on Peico. 6. The matter was posted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... review of the orders earlier passed, was not pressed by the learned Sr. Advocate. 7.8 In support of the arguments advanced the learned Sr. Advocate relied upon the following citations :- 1.General Industrial Controls Pvt. Ltd. v. C.C.E., 1991 (52) E.L.T. 449 (Tri.); 2.C.C.E. v. Ashok Leyland Limited, 1987 (29) E.L.T. 530 (Tribunal); 3.Standard Electric Appliances v. Superintendent of Central Excise, 1986 (23) E.L.T. 302 (Mad.); 4.Union of India v. Mahindra Mahindra Ltd., 1989 (43) E.L.T. 711 (Cal.); 5.Union of India v. Bombay Tyre International, 1984 (17) E.L.T. 329 (SC). 8.1 Shri Prabhat Kumar, the learned S.D.R. went through the facts of the case and dealt with the inter-connection and inter-relation between the manufacturers and the dealers. He submitted that the trade discount in this case was not an independent discount. It had a nexus with certain services that the dealers were required to undertake, on behalf of the manufacturer. The advertisement was the job of the manufacturer, and advertising is a recurring feature. Normally no one advertise in others name. 8.2. The Learned S.D.R. also made the following points :- (1) The arguments relating to advert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. were the job of the manufacturer. In this connection, the learned SDR relied upon the Tribunal s decision in the case of Diamond Clock Manufacturing Company v. C.C.E., 1988 (34) E.L.T. 662 (Tri.) = 1988 (15) E.C.R. 57 (Tribunal) wherein it has been held that the manufacturer is responsible for the warranty, and the expenses incurred for the same should be included in the assessable value. 8.3 The learned S.D.R. submitted that in the case of General Industrial Controls Pvt. Ltd. v. C.C.E., 1991 (52) E.L.T. 449 (Tribunal), the learned JDR representing the department did quote a number of relevant and applicable decisions, and that case had no precedence value. He further submitted that that case related to invoice value assessment under Notification No. 120/75-C.E., dated 30-4-1975. The provisions of Notification No. 120/75-C.E. were not applicable to the cases covered by Section 4 of the Act, as referred to by the Hon ble Supreme Court in the case of Texmaco case reported at 1992 AIR SCW 2020. 8.4 The learned SDR also referred to a number to a number of other citations in support of the points made by him. 9. In rejoinder the learned Sr. Advocate submitted that the citation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceivers, during the prescribed guarantee service period. 24. The company reserves the right to exercise control and supervision at any time over all repairs of Philips receivers and in case repairs are considered by the compnay to be of an unsatisfactory nature, the company will be free to correct such repairs at the cost and expense of the dealer. 26. The dealers shall carry out at their own expenses, advertisement compaign to promote sales of the company s products. 13.1 It is seen from the guarantee that the guarantee is from the Peico, is valid throughout India, and is for a period of 6 months from the date of purchase. Semi conductors and lamp for stereo cassette deck were guaranteed for 3 months. The guarantee reads as under :- Should a defect develop in this apparatus during the period of guarantee Peico Electronics and Electricals Limited undertake to get the apparatus repaired `FREE OF CHARGE by their authorised dealer from whom it has been purchased. However, if the purchaser has to shift his residence to another town on account of transfer of other causes, the guarantee benefit will be available at the nearest authorised Philips dealer. 13.2 During th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts of their suppliers, then such an advertisement is not on behalf of themselves but on behalf of their suppliers. In this case, the advertisement is mandatory - shall carry out; all expenses have to be borne by the dealers himself - at their own expenses, and the advertisement campaign was to promote sales of the company s products, with no relationship whether the dealer was dealing in all of them or in few of them. 14.2 Shri R.B. Tandon, Product Sales Manager, Consumer Electronics for Western Region had stated that the advertisement cost is shared between the company and the dealers in 50 : 50 basis. 15. Under Section 4 of the Act `value in relation to any excisable goods, does not include, subject to such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever, allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale. The expression such discount not being refundable on any account whatsoever signifies that the buyer should not be under any obligation, other than the normal obligation of a buyer, to the seller on account of and for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e discount was given to the wholesalers who were not required to provide the after sale service. The Hon ble Supreme Court held in para 16 of their judgment as under :- Threrfore, the Central Government rightly did not take into account such area distributors who may have to provide after sale service. The trade discount given to such wholesalers, who were under no obligation to provide after sale service is the relevant trade discount given to the wholesalers. 21. In para 15.7 of his order, the Collector, Central Excise, taking into consideration all the facts discussed by him in the order had come to a finding that Peico were not eligible for the deduction on account of that portion of normal trade discount as described by them, to the extent of 2% of the discount attributable to after sales service and advertisement incurred by the dealers on behalf of the assessee. 22. Out of the trade discount given to their authorised dealers from time to time, out of their sale price, the Collector, Central Excise has thus disallowed 2% of the discount attributable to after sale service and advertisement. He confirmed on these account the demand of Rs. 5617416.80 (against Rs. 1966095 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advertisement and sales promotion budget and media shall be determined by distributors . Distributors shall alone be responsible for carrying out the advertisement campaign and shall bear the cost of such advertisement. The distributors shall further be responsible for designing and producing adequate sales literature, the cost of which will be borne by the distributors entirely. The distributor shall not include in such advertisement and/or other sales promotional media and technical data without the same being approved in consultation with the manufacturers prior to its publication. The manufacturers shall not withhold their approval on such technical data unreasonably. 29. The facts in the case of Collector of Central Excise v. Ashok Leyland Limited, 1987 (29) E.L.T. 530 (Tribunal) were entirely different. There were sales to Government departments, to main dealers; there were retail sales; there were removals, for captive use, and there were stock transfers to the assessee s own regional sales offices. The Tribunal in that case had held that the net dealer price charged by the assessee from their main dealers from time to time, will form the basis for assessments under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turnover tax should be allowed to be deducted from the sale price in order to arrive at the assessable value and also octroi where payable/paid by the manufacturer. These taxes if proved to have been paid should be allowed even if they are paid periodically to the relevant taxing authorities in accordance with the relevant provisions of taxing statutes/rules. 37. It is seen that the appellants had claimed deduction on account of irrecoverable taxes on equalised basis by arriving at the average of such taxes. 38. The Collector, Central Excise had observed that the non recoverable taxes were not included in the factory cost but covered under selling and distribution over head account. He came to a finding that the non recoverable taxes were not included in the assessable value. He had referred to the order of the Assistant Collector, Central Excise at page 51 of his order that M/s. Peico are recovering/showing Central Excise duty, additional tax, non-recoverable taxes separately in the invoices . It has been contested by the appellant. They have submitted that such taxes could never be recovered from the customer (ground `H of the Grounds of Appeal). 39. The Collector, Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that res judicata was not to apply to adjudication or assessment proceedings before revenue authorities. (para 6). In the case of D.C.W. Limited v. C.C.E., 1988 (35) E.L.T. 167 (Tribunal) the Tribunal have observed that when new facts have come to light consequent on the investigation, second show cause notice was not barred by res judicata. In the case of Vinod Paper Mills Limited v. C.C.E., 1989 (39) E.L.T. 105 (Tri.) = 1988 (19) E.C.R. 275 (Tribunal), it has been held that when total sale value was not disclosed to the department, extended period of limitation was applicable (para 8). In the case of U.P. Lamination v. C.C.E., 1988 (35) E.L.T. 398 (Tribunal) in para 15 of their order, the Tribunal have held that extended limit of 5 years was invokable when suppression of facts was established. Visits of Excise officers to manufacturer s factory would not absolve the manufacturer of liability to duty. It was added that penalty was also justified in absence of disclosure of full facts relating to clearances. 46. The various annexures to the show cause notices have been discussed in detail by the Collector of Central Excise alongwith the comments filed by the assessee thereo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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