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TMI Blog1999 (6) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... (96) E.L.T. 12 (S.C.), the Hon ble Apex Court has held that interest on credit sales is deductible from the assessable value. Learned Advocate submits that while arriving at this decision the Hon ble Supreme Court has followed the case of G.O.I. v. MRF Ltd. as in 1995 (77) E.L.T. 433 (S.C.). Learned Advocate also cites the following decisions in this respect :- (i) Indian Rayons Industries Ltd. - 1995 (76) E.L.T. 88 (T) (ii) Jay Chemicals Industries - 1997 (93) E.L.T. 698 (Tribunal) = 1997 (71) ECR 782 (T) Learned Advocate further submits that in view of the aforesaid citations, the law is clearly settled in this case and it is treated as post manufacturing expenses. 4. Learned Advocate further submits that as per para 8 (internal page 4 of the order-in-appeal impugned), the learned Commissioner (Appeals) has held that since the appellants have not charged and received this interest separately, therefore the same is not to be deducted. Learned Advocate submits that since it is a post manufacturing expense, it is immaterial whether it is charged separately or it is included in the price of the goods by claiming deductions. He submits that these are only two sides of a coin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceivables are not to be included in the assessable value. The department s case is that since interest was not charged and collected separately from the price, therefore same cannot be deducted. However, we find that once the consideration involved is with respect to prompt payment as against credit sales, then the same principle would apply in this case. This is also clear from the decision of the Tribunal in the case of Jay Chemicals Industries (supra) wherein it has been held that even when the invoice price included the interest, the said interest was not to be included in the assessable value in view of MRF judgment rendered by Hon ble Apex Court (supra). 9. In view of the aforesaid analysis, we find that the appellants are entitled to deductions of interest on credit sales from the assessable value. 10. With respect to the availability of overriding discount as deductions from the assessable value which the appellant is allowing to M/s. ITC, the ld. Advocate submits as follows :- (a) As per the agreement between the appellant and M/s. ITC, the goods received by ITC are not on stock transfer but on outright purchase for which invoices are raised and monies received by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of trade discount by 2% by Revenue on the grounds that this concerns advertisement expenses and free after sales service was uncalled for. (g) He further cites the case law of Mopeds India Ltd. as in 1986 (23) E.L.T. 8 (S.C.) wherein in para 6 Hon ble Apex Court has held that as the agreement between the appellants and its dealers was on a principal to principal basis and because quantum of the discount was known in advance, as also the liability of the dealers to provide specified facilities and services that this Mopeds having been specified in the agreement, therefore the said amounts were clearly trade discount liable to be deducted from the assessable value. (h) Ld. Advocate then cited the case of G.O.I. v. MRF Ltd., as in 1995 (77) E.L.T. 433 (S.C.) wherein the Hon ble Apex Court has considered the meaning of discount in para 45 of the said judgment. The Apex Court has relied therein on the meaning of the word discount in the Concise Oxford Dictionary which has defined it as a deduction from the bill or amount due given specially in consideration of prompt or advance payment or to a special class of buyers. Learned Advocate submits that bulk buyers would clearly fall u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of this, we find that the relationship between the appellants and M/s. ITC is one of bulk wholesale dealer and not as selling or commission agent. The Hon ble Supreme Court has applied the main test for distinguishing between the dealer and selling or commission agent as being that (a) there should be a sale involved and (b) that this sale should be on principal to principal basis. In fact, in the decision of Seshasayee Paper Products (supra) it has been further held that even an indenting i.e. selling agent can, when acting as a regular purchaser or dealer, avail of the trade discount because nothing in law bars an indenting agent to also sometimes act as a regular dealer and purchase the goods. In the present instance, we are satisfied that in view of the invoices issued and consideration thereon received, as well as in view of terms and conditions of the agreement, M/s. ITC cannot therefore be held as selling agents or canvassing agents or indenting agents or commission agents. In view of the discount made available to them, which incidentally is of fairly low quantum of 0.25% and therefore cannot be said to be not in the course of ordinary business considerations, it cannot a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was at the same levels as was available to all other dealers. Therefore, the expenses on advertisement incurred by this wholly owned subsidiary would also have to be treated on par with those incurred by other dealers. 17. In this connection, learned Advocate cites the following decisions :- (a) Philips India Ltd. - 1997 (91) E.L.T. 540 (S.C.) (b) Havmore Ice Creams Co. Ltd. - 1997 (89) E.L.T. 65 (T) (c) Somani Pilkington s Ltd. - 1998 (99) E.L.T. 99 (Tribunal) = 1998 (75) ECR 375 (T) (d) C.C.E., Cochin v. Microwave Products Ltd. and vis-a-vis as in 1998 (79) ECR 69 (T) (e) Delstar Pvt. Ltd. - 1998 (103) E.L.T. 302 (T) 18. Learned Advocate submits that in all these cases, it has been held that where no payments have been recovered on advertisement charges, same cannot be included in the assessable value. Learned Advocate fairly conceded that in the case of Steel City Beverages as in 1994 (72) E.L.T. 80 (Tribunal) and Delhi Bottling Co. as in 1996 (66) ECR 713 (T) = 1998 (15) RLT 685 (T), it has been held that where the assessee has recovered advt. charges from the dealers, same becomes includible in the assessable value. Learned Advocate says that the facts of these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the appellants. Hence, it would be includible in the assessable value. 21. At this point, ld. Advocate rose to rebut as follows :- (a) With respect to the submissions by ld. SDR that there was no agreement between the appellants and their dealers with respect to the advt. charges noted above, he submits that in the case of Delstar Pvt. Ltd. (supra), the Tribunal had considered a situation wherein there was neither any written or oral agreement or directions from the manufacturer to the assessee to engage upon any such advertising campaign. Since the decision of Delstar supports the case of the appellants, therefore ld. SDR s submission regarding absence of agreement would have to be disregarded. (b) With respect to ld. SDR s submission on Hallmark Tobacco Co., ld. Advocate again reiterates his submission that since the price at which the goods were sold to this company was exactly the same as was in the case of many other dealers, therefore the relationship between the two has in no way affected the price. Hence the question of adding advt. charges incurred by Hallmark Tobacco Co. would have to be decided on the same ground as all other dealers. (c) With respect to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncurred by the dealers have no nexus with sale of the goods by the appellants and would not be includible in the assessable value thereof. 24. We also find that whether there is an agreement between the two or not is really not material to this issue, because the only ground on which Revenue can claim that the sale price of the goods which has not represented the true value is when it can show that certain additional sums flowed back from the dealers to the manufacturer but were not reflected in the invoice under which the goods were sold. There is no evidence to show that the relationship between appellants and Hallmark Tobacco Co. has influenced the assessable value. Hence above finding apply in this case also. 25. We also find that in view of the fact that in the instant case, there was no such flow back i.e. recovery of sums by the appellants from the dealers, therefore, the decisions in the case of Steel City Beverages Delhi Bottling Co. (supra) stand distinguished on facts. 26. In view of the aforesaid analysis, we are of the considered view that the appeal succeeds on all the three issues considered above. The order-in-appeal impugned is thus set aside and the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X
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