2018 (11) TMI 1669 - AT - Central Excise

Tribunal remands case for re-calculation of Central Excise duty, denies commission deductions

M/s Creative Polymers Pvt. Ltd Versus CCE Pune-I

The Tribunal allowed the appeal and remanded the case for the re-calculation of Central Excise duty, directing the Adjudicating Authority to extend the ... Method of Valuation - paints and varnishes - to be valued u/s 4A of Central Excise Act, 1944 or u/s 4(1)(a) of Central Excise Act, 1944? - benefit of cum-duty price - scope of remand - HELD THAT:- This Tribunal while remanding the matter, categorically observed that the Appellants should be allowed the cum-duty price benefit; also eligible deductions from the price be allowed to the Assessee. Therefore, there is no scope left to the learned Commissioner (Appeals) to decide whether benefit of cum-duty price be extended or otherwise when the said benefit was already allowed to the Appellant by this Tribunal. Deductions on account of over-riding commission paid to the indent agent - HELD THAT:- The said commissions are paid to various dealers/agents who procure orders on behalf of the Appellant. The principle of law in this regard is well settled as the commission paid cannot be considered as ‘discount’ by the Hon’ble Supreme Court in COROMANDEL FERTILISERS LTD. VERSUS UNION OF INDIA AND OTHERS [1984 (8) TMI 80 - SUPREME COURT]. The Appellants are not eligible to deductions claimed on account of commission paid to the indenting agents. However, to extend the benefit of cum-duty price, we remand the matter to the Adjudicating authority to re-compute the duty, after extending the cum-duty price benefit to the Appellant. Appeal allowed by way of remand. Issues:1. Assessment of Central Excise duty under Section 4(1)(a) of Central Excise Act, 1944.2. Allowance of deductions and benefit of cum-duty price in calculating the assessable value.3. Treatment of commission paid to indent agents as a deduction.Analysis:Issue 1: Assessment of Central Excise duty under Section 4(1)(a) of Central Excise Act, 1944The appeal was filed against an Order-in-Appeal passed by the CCE (A), Pune-I, regarding the assessment of Central Excise duty on paints and varnishes manufactured by the Appellants. The Tribunal remanded the matter to the Commissioner (Appeals) for re-calculation of duty as per Section 4(1)(a) of the Act, allowing deductions and extending the benefit of cum-duty price. The Commissioner's decision was challenged due to disallowance of deductions and failure to consider the cum-duty price benefit.Issue 2: Allowance of deductions and benefit of cum-duty priceThe Appellant contended that the Commissioner erred by not following the Tribunal's direction to extend the benefit of cum-duty price in calculating the assessable value. The Appellant argued that the price charged, inclusive of duty, should have been considered. The Tribunal reiterated that the Appellants should be allowed the cum-duty price benefit and eligible deductions from the price, leaving no scope for the Commissioner to decide otherwise. The Tribunal emphasized the need to extend the cum-duty price benefit to the Appellant.Issue 3: Treatment of commission paid to indent agentsThe Appellant claimed deduction for commission paid to indent agents, arguing it should be considered a permissible deduction as a finance cost. However, the Revenue contended that the commission was included in the price, and thus not admissible as a deduction. Citing legal precedents, the Tribunal held that the commission paid to agents cannot be considered a discount, following settled law on the issue. Consequently, the Appellants were not eligible for deductions on account of commission paid to indenting agents.In conclusion, the Tribunal allowed the appeal by remanding the matter to the Adjudicating Authority to re-compute the duty after extending the cum-duty price benefit to the Appellant. The Appellants were not granted deductions for commission paid to indent agents based on established legal principles.