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CUSTOMS, EXCISE AND GOLD (CONTROL) APPELLATE TRIBUNAL, NEW DELHI
G.P. Agarwal, P.C. Jain, JJ.
R.R. Paints -Appellant
Versus
Collector of Central Excise, Ahmedabad -Respondent
Order Nos. 49 to 61/87-A, 49 to of 1987, 61 of 1987
Decided On : 03-02-1987
M.S. Dave, Mahadev Rajan,G.V. Naik
P.C. Jain, Member (T)
1. These batches of appeals involve the issues whether the following discounts or deductions claimed by the appellants from their FOR destination prices of various products manufactured by them are permissible or not :-
(i) Average Freight
(ii) Cash/Regular Payment Discount (R.P.D.)
(iii) Turn-over Discount and
(iv) Central Sales Tax
First three deductions referred to above are common to all the 13 appeals. The last deduction claimed on account of Central Sales Tax is common to the last mentioned batch of 11 appeals.
2. It is apparent from the impugned order passed by the Collector (Appeals), Bombay that he has merely endorsed the order passed by the lower authority, namely the Assistant Collector. Therefore, in order to examine the reasons as to why the various deductions as claimed by the appellants have been disallowed, we shall have to examine the reasons given by the Assistant Collector of Customs.
3. Before a detailed examination of the various claims made by the appellants is made it is necessary to set out in brief the sale pattern of the appellants as narrated by them and not controverted by the respondent. Under the provisions of Rule 173-C of the Central Excise Rules, 1944 price lists were submitted by the appellants enclosing therewith their pattern of sales declaring the prices of their various products and claiming deductions therefrom of the amount of trade discount allowed to their buyers in accordance with the normal trade practice of the wholesale trade at the time of removal of the goods. Following features emerge regarding their sales pattern as observed from one of their price lists (Exhibit 'A' to the paper book filed by the appellants.
(1) Price is the sole consideration for sale of their products and there is no relationship between their buyers and the appellants.
(2) Prices are inclusive of central excise duty for delivery at destination but exclusive of sales tax and other taxes.
(3) Trade discount is allowed as detailed in relevant columns of the price list in respect of the products.
(4) Certain Post Manufacturing Expenses (PME) namely average freight and average discount of any sort actually being passed on to the customers under any name are permissible. These expenses have been worked out at 7.64% on the basis of actual percentage of such average freight and discounts worked out for accounting year ending 30.6.1983. These are under the following heads:-
xxx xxx xxx xxx xxx
Chartered Accountant's certificate has also been enclosed.
4. It is also the further contention of the appellant that their aforesaid deductions are based on circulars given out to all the buyers and it cannot, therefore, be stated that the nature of deduction claimed is not known at or prior to the removal of the goods.
5. With regard to the various deductions claimed by the appellants, learned representative Shri M.S. Dave for the appellants has submitted that there can be no dispute regarding permissibility of these deductions in view of the Supreme Court's pronouncement in the case of Bombay Tyre International Ltd. v. Union of India 1983 E.L.T. 1896 in so far as the deduction of average freight is concerned and a subsequent clarification dated 14/15.11.1983 by the Hon'ble Supreme Court in the said case in so far as the other deductions claimed are concerned.
6. Learned JCDR, on the other hand, has relied on the latest judgement of the Supreme Court in Civil A. No. 395 of 1979 in the case of Assistant Collector of Central Excise and Ors. v. Madras Rubber Factory Civil A.No. 4731-4732m SLP (Civil) No. 10108 of 1980 and Civil A.No. 793 of 1984 in the case of Madras Rubber Factory v. Collector of Central Excise, Madras, delivered on 20th December, 1986. [1987 (27)-E.L.T. 553 (S.C.). This latest judgement of S.C., according to the learned JCDR goes into the various types of discounts claimed by M/s. Madras Rubber Factory and decisions have been given by the Hon'ble Court thereon. Ratio of this decision in respect of
