1999 (10) TMI 342 - AT - Central Excise

Tribunal decision on assessable value: Commission paid to agents included, dyeing expenses excluded.

MALWA COTTON SPG. MILLS LTD. Versus COMMR. OF C. EX., CHANDIGARH

MALWA COTTON SPG. MILLS LTD. Versus COMMR. OF C. EX., CHANDIGARH - 2000 (118) E.L.T. 184 (Tribunal) Issues:1. Assessment of excise duty on grey yarn manufactured by the appellants.2. Inclusion of dyeing expenses, commission paid to agents, trade discount, and cash discount in the assessable value.3. Treatment of trade discount and cash discount given by the appellants to dealers in arriving at the assessable value.Analysis:1. The appellants manufactured cotton and acrylic grey yarn, which were excisable goods. The grey yarn was sold to wholesale dealers and sent to job workers for dyeing. The authorities demanded duty by adding dyeing expenses, commission to agents, trade discount, and cash discount to the assessable value. The appellants appealed, arguing against this. The appellate authority upheld the duty assessment. The tribunal confirmed that commission paid to agents should not be deducted from the assessable value as it promotes the business and should be added. Therefore, this part of the orders was upheld.2. The tribunal considered the value of grey yarn at the time of removal from the factory as crucial for excise duty assessment. The yarn was cleared as grey yarn and not dyed, so the cost of dyeing incurred later should not be added to the value for duty assessment. The job worker who dyed the yarn should be liable for duty on the manufacturing process, following the principle set by the Supreme Court. The tribunal found that the authorities did not consider this aspect correctly and set aside the inclusion of dyeing expenses in the assessable value.3. Regarding the trade discount and cash discount given by the appellants to dealers, the tribunal noted that the authorities did not determine the actual amounts paid as discounts. Trade discounts, regardless of nomenclature, should be deducted from the assessable value if known to dealers before the sale and benefiting them. The tribunal directed the matter back to the adjudicating authority to ascertain the actual trade discount given to dealers. It clarified that commission paid to agents should not be deducted from the assessable value. Therefore, the tribunal allowed the appeals, setting aside the inclusion of dyeing expenses for duty assessment and remanding the matter for determining the trade discounts given to dealers accurately.