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TMI Blog1997 (3) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... ants were alleged to have failed to include the selling and other charges at 4.5% to 5% collected from their customers. 2. The appellants had filed declaration showing the details of determination of assessable value of the final product i.e. Nylon Filament Yarn as per Board's Circular No. 29/29/94-C.X., dated 21-3-1994 in which the appellants had claimed deduction of `selling and other charges' at 4.5% to 5%. Subsequently, after charging Excise duty and other taxes, the appellants are alleged to have added the `selling and other expenses' separately in the invoice for recovery from buyers. This was considered to be attracting the provisions of Rule 5 of the Valuation Rules, 1975 and contravention of Section 4 of the Central Excise Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. From above claim, the Assistant Commissioner allowed deduction on account of Turn over Tax. In respect of other items the Assistant Commissioner held as under : Textile Committee Cess This cess is not a tax. The definition of a tax is that, there should be no quid proquo, i.e. the collecting agency does not have a responsibility to use the collected tax, in a specific manner, Section 4(3)(d)(ii) of Central Excise Act, 1944 provides for deductibility of tax only. Trade discount The trade discount as claimed by the appellants seems to be a second thought. They had not claimed these discounts as included in the selling charges and other expenses when they replied to the show cause notice. They also did not produce any agreement in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es & Salt Act, 1944. For this purpose, the appellants have provided with the extract of Compilation of Textiles Committee Act, 1963, No. 41 of 1963. This is an Act passed by the Parliament for ensuring the quality of textiles and textile manchinery and matters connected with. Under Section 5A of the Act, the following is provided : 5A. (1) There shall be levied and collected as a cess for the purpose of this Act, a duty of excise on all textile and textile machinery manufactured in India at such rate, not exceeding one per cent ad valorem as the Central Government may, be notification of the official Gazette ……. (2) The duty of excise levied under sub-section (1) shall be in addition to any cess of duty leviable on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contrary is therefore, set aside. 11. The next question to be considered is whether in the given circumstances the appellants can be allowed to deduct the trade discount as claimed by them as included in the `selling and other expenses'. For such benefit, the so called trade discount should qualify the following conditions as discussed in various judgments by the Apex Court and Tribunal. (a) That such discount is in accordance with the trade practice of the wholesale trade in respect of such goods; (b) That such trade discount was made known to the dealers prior to the time of removal of the goods from the factory. (c) That such trade discount was actually passed on to the dealers; and (d) That such trade disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also alleges that they have collected the selling charges and other charges at 4.5% from their customers as per annexure to the show cause notice. There is no discussion on this point in the impugned order. Therefore, while holding that trade discount is allowable for deduction from the sale price, the same should be subject to the satisfaction of the Asstt. Commissioner that; (i) The trade discount claimed for deduction was actually given to the buyers; (ii) The trade discount so given was not refunded to the appellants; (iii) That there was agreement with the buyer indicating that trade discount was to be given and that it was made known prior to the removal of goods. 15. If the agreement contains the provision to give certa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon'ble Apex Court and Tribunal as discussed above, such expenses recovered separately from part of the sale price or wholesale price, inclusive of excise duty. This is cum-duty price. Hence duty payable on such amount of expenses has to be calculated treating the disallowed amount for deduction as cum-duty price in terms of judgment of the Hon'ble Supreme Court in case of U.O.I. v. M.R.F. Ltd. - 1995 (77) E.L.T. 433 (S.C.) as discussed at para 67. 18. In the result, I hold that the cess on textile paid by the appellants is to be excluded from the sale price. The Trade discount may be allowed to be deducted provided it satisfies the test prescribed by the Hon'ble Apex Court as discussed above. Trade Discount to wholesale dealer in r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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