1992 (2) TMI 94 - HC - Central Excise

Court upholds credit charge demand, allows transport deduction pending verification. Petitioner's challenge on interest rates for scrutiny.

The court upheld the demand on credit charges but allowed deduction for transportation charges, pending verification. The petitioner's challenge on credit ... Valuation (Central Excise) Issues:Central Excise Duty on credit charges, transportation charges, and packing charges collected by the petitioner company.Analysis:The judgment pertains to a case where the petitioner company, engaged in the manufacturing of excisable goods, was issued show-cause notices by the Superintendent of Central Excise for depositing Central Excise Duty on credit charges, transport charges, and packing charges collected during a specific period. The notices alleged that the petitioner had availed small-scale exemption but charged additional amounts from customers, which should be added to the assessable value under relevant provisions of the Central Excise Act and Rules. The charges were deemed as additional consideration indirectly flowing from buyers to the assessee. The transportation charges were also questioned for not being related to actual transportation costs, and the packing charges were disputed for lack of proof regarding the durability and returnability of the packings.The petitioner contended that credit charges were compensation for delayed payments and should be deducted from the assessable value as they did not enhance the value of goods. Regarding transportation charges, the company argued that sales were made at the factory gate, and no separate assessment should be made for transport charges. The company disputed the allegations on packing charges but refrained from making submissions due to a court injunction.The Assistant Collector adjudicated on credit and transportation charges, sustaining the demand on credit charges but allowing deduction for transportation charges, subject to verification. The petitioner challenged the decision on credit charges, citing a Supreme Court precedent and arguing that the charges were akin to interest on deferred payments and did not enhance the value of goods. The court directed further scrutiny of relevant documents to determine if the credit charges were lawful interest rates and if the assessable value excluding transport and packing charges was reasonable.Ultimately, the court disposed of the appeal, ordering the Assistant Collector to conduct a thorough examination of the company's documents to ascertain the nature of credit charges and the reasonableness of the assessable value excluding transport and packing charges. No costs were awarded, and all parties were instructed to act upon the judgment.