2000 (5) TMI 588 - AT - Central Excise

Tribunal rules sales at factory gate to industrial consumers as wholesale, not retail.

The Tribunal determined that sales to industrial consumers and actual users directly from the factory gate on contract prices should be classified as ... Valuation Issues:1. Determination of sales to industrial consumers and actual users as retail or wholesale.2. Comparison of sales pattern with other companies.3. Applicability of legal principles on retail sales.4. Assessment of assessable value for tailor-made goods.5. Consideration of deductions for retail sales.6. Remand for re-adjudication by the Assistant Commissioner.Issue 1: Determination of sales to industrial consumers and actual users as retail or wholesale:The appeal contested the finding that sales to industrial consumers and actual users directly from the factory gate on contract prices should be considered wholesale, not retail sales. The Commissioner (Appeals) emphasized the importance of the mode of purchase over the mode of sale. The Tribunal noted the unique sales pattern where orders were collected on a contract basis at the factory gate, distinguishing it from traditional retail sales. The criterion of consumption by the buyer alone was insufficient to establish retail sales.Issue 2: Comparison of sales pattern with other companies:The appellant compared their sales pattern with Voltas and Godrej, highlighting similarities in manufacturing forklifts and direct sales to consumers for their own use. The appellant argued that their case mirrored those where the Tribunal had classified sales as retail. The submission aimed to challenge the Commissioner's classification of contract sales as wholesale.Issue 3: Applicability of legal principles on retail sales:After reviewing the submissions and evidence, the Tribunal found the sales pattern akin to Voltas and Godrej cases, where sales to individual customers for personal use were considered retail. The Tribunal cited the need to determine assessable value under Central Excise Valuation Rules, allowing deductions for retail sales. However, for tailor-made goods, specific contract prices were to be applied, affecting the assessment under Section 4.Issue 4: Assessment of assessable value for tailor-made goods:The Tribunal acknowledged that tailor-made goods required a distinct assessment approach, where contract prices would prevail for valuation under Section 4. Standard products sold in retail were subject to deductions, aligning with previous decisions like the Escorts case. The differentiation between standard and tailor-made goods impacted the determination of assessable value.Issue 5: Consideration of deductions for retail sales:Recognizing the need for deductions for retail sales, the Tribunal emphasized the applicability of previous decisions for granting deductions and accepting contract prices for certain trucks. The case required re-adjudication to ensure the correct application of deductions and assessable values based on the retail sales concept.Issue 6: Remand for re-adjudication by the Assistant Commissioner:In light of the findings, the Tribunal set aside the impugned orders and remanded the matter for re-determination of assessable values by the Assistant Commissioner. The appellant was instructed to provide necessary data for the re-adjudication process, particularly concerning non-standard tailor-made contracts. The appeal was allowed for a de novo adjudication by the Assistant Commissioner.