1995 (9) TMI 183 - AT - Central Excise

Company's Employee Discounts Excluded from Assessable Value Determination

The Tribunal held that the reduced prices offered to employees by a company for goods sold did not meet the criteria for assessable value determination ... Valuation - Invoice Price Issues:- Assessment of goods on invoice price under Notification No. 120/75-C.E.- Acceptability of reduced invoice price for goods sold to employees as assessable value.Analysis:1. The appeal was against an order passed by the Collector Central Excise (Appeals) regarding the assessment of goods by a company engaged in manufacturing wood products. The company sold firewood and sawdust to employees at reduced prices compared to market rates, leading to a dispute over the assessable value for excise duty calculation under Notification No. 120/75-C.E.2. The Department contended that the reduced prices offered to employees were influenced by the relationship between the company and its employees, which was not acceptable under the proviso IV to Notification No. 120/75. The Revenue argued that the assessable value should not be influenced by any relationship beyond the sale of goods, as per the notification.3. The Tribunal examined the case to determine if the reduced invoice price for goods sold to employees could be considered the assessable value under Notification No. 120/75-C.E. The Tribunal referred to a previous case law stating that the assessable value must follow the principles of Section 4 of the Central Excises and Salt Act, which requires the value to be based on the normal price in wholesale trade to an unrelated buyer.4. Relying on the legal principles and precedents, the Tribunal concluded that the reduced prices offered to employees did not meet the criteria for assessable value determination under Notification No. 120/75-C.E. Therefore, the impugned order was set aside, and the appeal filed by the Revenue was allowed.