1997 (6) TMI 82 - AT - Central Excise

Tribunal Grants Refund, Emphasizes Trade Discounts

The appellate tribunal set aside the orders denying refund claims and approval of revised price lists, remanding the matter for reconsideration. The ... Valuation - Related person Issues: Appeal against Order-in-Appeal on price lists and refund claims; Validity of orders passed by Assistant Collector without show cause notice; Determination of assessable value based on trade discounts; Mutuality of interest between manufacturer and sole buyer; Applicability of Section 4(4)(c) of the Central Excise Act, 1944.Analysis:The appeal before the Appellate Tribunal CEGAT, New Delhi was directed against an Order-in-Appeal dated 22-11-1988 passed by the Collector of Central Excise (Appeals) Bombay, which reversed the orders passed by the Assistant Collector, Rajkot. The appellant, engaged in the manufacture of textile bearings and parts thereof, was filing price lists under protest and had filed six refund claims for duty paid between April 1979 to February 1984. The Assistant Collector had initially allowed the refund claims and approved revised price lists showing lower prices charged by the manufacturer to the sole buyer. However, on appeal, the Collector (Appeals) set aside the orders of refund and approval of revised price lists under Section 35E(2) of the Central Excise Act, 1944.The orders passed by the Assistant Collector were challenged on the grounds that they were not preceded by any show cause notice. The Collector (Appeals) held that a single appeal was maintainable and highlighted the inter-relationship between the manufacturer and the sole buyer, indicating a mutuality of interest between the two concerns. The appellate authority concluded that the dealings were not at arm's length and the price was not the sole consideration, deeming the sole buyer as a related person under Section 4(4)(c) of the Act, leading to the setting aside of the refund orders and approval of revised price lists.The Appellate Tribunal found it unnecessary to delve into the question of 'relationship' under Section 4(4)(c) of the Act, as the appellant expressed satisfaction if legitimate deductions of trade discounts were considered. The Tribunal emphasized that if the sole buyer was passing on any part of the discount to their customers, legitimate trade discount deductions must be granted in determining the assessable value under Section 4(1)(a) of the Act. As this aspect was not considered by the lower authorities, the matter was remanded for a fresh decision on this issue and consequential orders on the refund applications.In conclusion, the impugned orders on the refund applications were set aside, and the refund claims were remanded to the adjudicating authority for a fresh decision considering the observations made in the order and providing the appellant with an opportunity for a personal hearing. The appeal was allowed, and the matter was to be reconsidered based on the proper application of trade discounts in determining the assessable value.