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of <h1>Court allows bank charges deductions but disallows damage discounts. Clarifies distinction in deductibility.</h1> <h3>COMMISSIONER OF CENTRAL EXCISE, NEW DELHI Versus VIKRAM DETERGENT LTD.</h3> COMMISSIONER OF CENTRAL EXCISE, NEW DELHI Versus VIKRAM DETERGENT LTD. - 2001 (127) E.L.T. 641 (SC), 2001 AIR 620, 2001 (1) SCR 392, 2001 (2) SCC 417, ... Issues involved:Challenging Customs Tribunal's decision on bank charges and damage discount as allowable deductions under Section 4 of Central Excises and Salt Act, 1944.Detailed Analysis:Issue 1:Civil Appeal No. 2579 of 2000:- The appellant challenged the excise duty calculation by Customs Department based on the price charged by Hindustan Lever Ltd. (HLL) to redistribution stockists.Civil Appeal No. 3160 of 2000:- M/s. IPF Vikram India Ltd. produced detergent under agreement with Indexport Ltd. (IEL) and Stepan Chemicals Ltd. (SCL) under the brand name 'Wheel'. The respondent claimed deductions for damage discount and bank charges on outstation cheques from the assessable value of goods for excise duty purposes.Issue 2:- The appellant argued that the discount on damaged goods was not admissible as a deduction on wholesale price as it could not be known at the time of removal from the factory. Bank collection charges were also contested as not falling under the definition of discount in the Act.- Respondents contended that damage deductions were for goods damaged during transit, not sold at the factory, and were akin to transit insurance costs. Bank charges were post-manufacturing expenses and should be deductible.Issue 3:- The crux of the matter lay in the interpretation of Section 4 of the Central Excise Act, 1944, specifically regarding the valuation of excisable goods for excise duty purposes.- The determination of 'normal price' with reference to the time and place of goods' removal from factories was crucial. Precedents like Union of India v. Bombay Tyres International Ltd. and others, clarified that transportation costs, including insurance, were deductible, but not compensation for defective goods.Issue 4:- The Tribunal's decision on damage discount as a trade discount under Section 4(d)(ii) was challenged. The Court held that compensation for damaged goods could not be a relevant consideration for determining manufactured goods' price at clearance.- However, bank charges were considered post-clearing expenses and deductible in calculating the assessable value of goods, as established in previous judgments like Assistant Collector of Central Excise v. Madras Rubber Factory and others.Conclusion:- The appeals were allowed to disallow damage discount deductions but dismissed for bank charges deductions. The Court emphasized the distinction between compensatory discounts for damaged goods and post-clearing bank charges, affirming the deductibility of the latter.
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