1984 (12) TMI 303 - AT - Central Excise

Tribunal modifies assessable value, excludes transportation charges. Appellants granted relief.

ORIENT GENERAL INDUSTRIES LTD. Versus COLLECTOR OF CENTRAL EXCISE, NEW DELHI

The Tribunal partially accepted the appeal, excluding transportation charges and the cost of the regulator from the assessable value. However, the appeal ... - Issues Involved:1. Packing Charges2. Cost of Transportation3. Incentive Bonus Discount4. Cost of Regulator5. Other Post-Manufacturing Expenses and Selling ProfitsIssue-wise Detailed Analysis:1. Packing Charges:The appellants argued that packing charges should not be included in the assessable value as the packing was only for transportation and storage, not essential to the manufacturing process. They cited the decision in M/s. Godrej and Boyce Manufacturing Co. Pvt. Ltd. v. Union of India to support their claim. However, the respondents contended that the packing was ordinary and necessary for trade, thus includable in the value.The Tribunal referred to the Supreme Court's ruling in Union of India v. Bombay Tyres International Ltd., which stated that the cost of packing necessary for marketability at the factory gate is includable in the assessable value. Since the appellants did not provide evidence of secondary packing, the Tribunal concluded that the packing charges should be included in the assessable value.2. Cost of Transportation:The appellants cited the Supreme Court decision in Union of India v. Bombay Tyres International Ltd., which allowed the exclusion of freight and transit insurance charges from the assessable value. The respondents conceded this point.The Tribunal agreed with the appellants and held that transportation charges, including transit insurance, should be excluded from the assessable value of the goods.3. Incentive Bonus Discount:The appellants argued that the incentive bonus discount, based on previous year's performance, should be considered a trade discount. They referenced the Supreme Court's clarification in Union of India v. Bombay Tyres International Ltd., which allowed trade discounts to be deducted if established by agreement or practice.The respondents countered that the incentive bonus was not granted at the time of removal and was contingent on future performance, thus not a trade discount.The Tribunal noted that trade discounts should be known at the time of removal. Since the incentive bonus was determined after the year-end based on performance, it was deemed a contingent concession rather than a trade discount. Consequently, the Tribunal ruled that the incentive bonus discount could not be deducted from the assessable value.4. Cost of Regulator:The appellants sought exclusion of the regulator cost from the assessable value, citing decisions by the Andhra Pradesh and Delhi High Courts, which held that the regulator is an indispensable part of the fan.The Tribunal agreed with these precedents and held that the cost of the regulator should be excluded from the assessable value of the fans.5. Other Post-Manufacturing Expenses and Selling Profits:The appellants did not press for these deductions, acknowledging the Supreme Court's decision in Union of India v. Bombay Tyres International Ltd., which disallowed such deductions.Conclusion:The Tribunal partially accepted the appeal, modifying the impugned order to exclude transportation charges and the cost of the regulator from the assessable value. The appeal was rejected concerning packing charges and the incentive bonus discount. Consequently, the appellants were granted relief in accordance with these modifications.