TaxTMI 
TaxTMI 
TaxTMI 
1995 (1) TMI 380
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....acts may be stated at the outset. The appellant is a Public Limited Company carrying on the business of manufacturing and marketing metal containers which were classified under Tariff Item No. 46 of the erstwhile schedule to the Central Excises & Salt Act, 1944 and liable to excise duty ad valorem. The Company for the purpose of its aforesaid business has factories in several parts of the country including Madras. The present appeals relate to the Madras factory. 2.That the appellant is manufacturing goods as per the individual customers' requirements and supplies to the customers against negotiated prices which are printed in the contract. It is the case of the appellant that one such customer is Ponds (I) Limited, an independent corporate body, which is neither related to the appellant nor has it any interest either directly or indirectly in the business of the appellant. The said Ponds (I) Limited which is engaged in the business, inter alia, of marketing cosmetic products being in need of steady supply of containers for its aforesaid business approached the appellant by way of an arrangement under which the appellant was to manufacture containers as per the specification suppl....
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....adras, by his decision dated 27th May, 1985, held against the appellant on all counts. The Assistant Collector held that the appellant suppressed material facts in order to evade payment of duty and consequently held that the extended period of limitation was available to the Department. The Assistant Collector also added the rebates and discounts mentioned in the agreements between Ponds (I) Limited to the contract price between the appellant and Ponds (I) Limited to arrive at the assessable value. The Assistant Collector also added ad hoc interest on the advances received by the appellant and added the same to the gross price for arriving at the assessable value. Accordingly, the demand of duty and special excise duty was confirmed. 6.The appellant preferred an appeal to the Collector of Central Excise (Appeals), Madras. The Collector of Central Excise (Appeals), Madras after hearing, partly allowed the appeal by accepting the contention of the appellant relating to loading of ad hoc interest on the advances made by Ponds (I) Limited but rejected the appellant's contention relating to the inclusion of rebates and discounts given to Ponds (I) Limited. The appellant, thereafter, p....
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....esale buyer of the appellant's goods, namely, metal containers manufactured by it as it was lifting 90 per cent of the total production of the appellant. For that purpose huge amounts were being advanced free of interest by Ponds (I) Limited to the appellant. When Ponds (I) Limited was given 50 per cent discount from normal price then the material aspect that Ponds (I) Limited had advanced large amounts free of interest had necessarily entered into consideration between the parties. Therefore, special treatment was given by the assessee to Ponds (I) Limited. It has to be appreciated that if Ponds (I) Limited had not given these amounts, the appellant would have been required to borrow these amounts for purchasing raw materials and other accessories from outside like banks etc. and would have been required to pay large amounts of interest which naturally would have got reflected in the purchase price to be charged from the buyers as it would be a part of cost of production which was to be passed on to the customers of the appellant's goods. It has been laid down by Section 4(1)(a) that normal price would be price which must be the sole consideration for the sale of goods and there c....
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....acts on record, therefore, it must be held that the Tribunal was perfectly justified in taking the view that charging a separate price for the metal containers supplied to M/s Ponds (I) Limited could not stand justified under Section 4(1)(a) proviso and, therefore, to that separate price charged from the Ponds (I) Limited, the extent of benefit obtained by the assessee on interest free loan was required to be reloaded by hiking the price charged from M/s Ponds (I) Limited to that extent. Contention No. 2 also, therefore, fails and is rejected. 12.This takes us to the last contention. On this contention the appellant is on a better footing. The Ponds (I) Limited was almost a wholesale buyer of the metal containers of the assessee during the relevant periods of assessment. Out of the total metal containers manufactured by the assessee in its factory at Madras, 90 per cent were lifted by Ponds (I) Limited. In such a situation the question arises whether the proviso to Section 4(1)(a) can be made applicable after taking out the consideration of interest free advance made by Ponds (I) Limited to the appellant. As we have rejected contention No. 2 and allowed reloading of purchase price....
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....of manufactured goods. He would certainly form a separate and distinct class. In this connection, we may usefully refer to the term "value" as mentioned in Section 4, sub-section (4)(d). It is subject to deductions envisaged by Section 4(4)(d)(ii) which include amongst others the trade discount (such discount not being refundable on any account whatsoever, allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale. It cannot be gainsaid that the appellant was manufacturing the goods which were offered for sale in wholesale to Ponds (I) Limited, a buyer also in wholesale and it lifted 90 per cent of the manufactured goods. For such a buyer if the manufacturer offers trade discount that amount cannot be included in the value of the excisable goods and has to be deducted for computing the normal price of the goods concerned. 13.Learned counsel for the Department vehemently contended that such a discount to be admissible has firstly to be uniformly made available to all customers like concessional sales of goods on festivals like Diwali or Christmas etc. It may be that such general concessions are g....