1999 (5) TMI 200

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....nts on account of dealer's commission from the retail price to arrive at the wholesale price was correct and the same was permissible deduction as sale commission under Rule 6(a) of the Central Excise (Valuation) Rules, 1975. The Department is in appeal against the said order on the ground that the commission which is paid by the respondents to their selling agents, i.e., dealers, for services rendered by them cannot be considered to be in the nature of trade discount qualifying for deduction in arriving at the assessable value of goods since such commission was not a trade discount given either to the wholesale buyer or to the retail buyer. The Department has relied on Supreme Court decision in Coromandel Fertilisers v. Union of India repo....

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....n the terms and conditions of the agreement between the respondents and the dealers, the dealers were required to promote the sale and service of the product so as to achieve the target as specified by the respondent company. The dealers were also to provide warranty service to the buyer and submit warranty service voucher. Also, as per the terms of the agreement, the sale commission was payable to the dealer only after the respondents had received full payment for the product sold by the dealer. The dealer was therefore merely an extended hand of the manufacturer and not an independent buyer and the goods were supplied to the dealer on the invoice showed sale price without any deduction. As regards warranty service performed by the dealer,....

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....d allowed the 5% deduction cannot be allowed from the retail price since the retail price should be the price for purposes of assessable value. Ld. Counsel submitted that Section 4(1)(a) provides for levy of duty on the normal price at which goods are sold in the course of wholesale trade where the buyer is not a related person and the price is the sole consideration for the sale. In the facts of the instant case, the proviso to Section 4(1)(a) was not attracted. As such, when the goods are not sold in the course of wholesale trade, the section provides for arriving at the wholesale price from the retail price and as per the Central Excise (Valuation) Rules, 1975 for arriving at the assessable value from the retail price the only method was....

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....price. Referring to the expression "would have sold......in the course of wholesale trade" in Rule 6(a), ld. Counsel submitted that if the respondent had sold the goods in wholesale trade, they would have to provide for dealers' discount which is essentially the dealers' margin including the component of after-sales service. The said discount given to the dealers is not includible in the assessable value although the same includes a component towards discharging warranty obligations and after-sales service. The same analogy would apply to cases where the goods were sold in retail and the assessee grants commission to its dealers for rendering after-sales service, etc. 5. As regards invoking of the extended period of limitation, ld. Co....