Court clarifies factors in determining assessable value: trade discounts, taxes, insurance costs, factory deductions. Transit insurance part of transport costs.P.N. Bhagwati, Amarendra Nath Sen and Ranganath Misra, JJ. ORDER 1. Trade Discounts. - Discounts allowed in the Trade (by whatever name such discount is described) should be allowed to be deducted from the sale price having regard to the nature of the goods, if established under agreements or under terms of sale or by established practice, the allowance and the nature of the discount being known at or prior to the removal of the goods. Such Trade Discounts shall not be disallowed... ... ... Issues involved: Trade Discounts, Taxes, Cost of insurance, Deductions for companies with multiple factories, Clarification of judgment.

Trade Discounts: Discounts allowed in the Trade should be deducted from the sale price if established under agreements or terms of sale, known at or prior to the removal of goods, regardless of when they are payable.

Taxes: Additional Sales Tax, Surcharge on Sales Tax, Turnover Tax, and octroi paid by the manufacturer should be deducted from the sale price to determine the assessable value, even if paid periodically to taxing authorities.

Cost of insurance: The cost of transit transport insurance covering goods from the factory gate to delivery places is part of the cost of transportation and should be included as a deduction.

Deductions for companies with multiple factories: When a company has multiple factories with the same prices at depots, deductions should be computed and allowed based on such prices, irrespective of the lack of identification of goods from a specific factory.

Clarification of judgment: The order provides clarification of the judgment delivered on 7th October, 1983, specifying the deductions allowed for trade discounts, taxes, cost of insurance, and for companies with multiple factories.

The matters discussed in the judgment will be listed for further hearing on 18th November, 1983, in court at 2 p.m. Valuation - Taxes to be excluded - Scope of ambit - Insurance on transportation UNION OF INDIA & OTHERS Versus BOMBAY TYRES INTERNATIONAL PVT. LTD.
Central Excise
1983 (11) TMI 70 - Supreme Court - 1984 (17) E.L.T. 329 (SC), 2005 (3) SCC 787
SUPREME COURT OF INDIA - SC
Dated:- 14-11-1983
2269/80, 2619/77, 1097/81, 1244/77 - -
Central Excise
P.N. Bhagwati, Amarendra Nath Sen and Ranganath Misra, JJ. ORDER 1. Trade Discounts. - Discounts allowed in the Trade (by whatever name such discount is described) should be allowed to be deducted from the sale price having regard to the nature of the goods, if established under agreements or under terms of sale or by established practice, the allowance and the nature of the discount being known at or prior to the removal of the goods. Such Trade Discounts shall not be disallowed only because they are not payable at the time of each invoice or deducted from the invoice price. 2. Taxes. - Additional Sales Tax, Surcharge on Sales Tax, and Turnover Tax should be allowed to be deducted from the sale price in order to arrive at the assessable value, and also octroi where payable/paid by the manufacturer. These taxes if proved to have been paid, should be allowed even if they are paid periodically to the relevant taxing authorities in accordance with the relevant provisions of taxing statutes/rules. 3. It is clarified that the cost of insurance mentioned in the judgment as part of the cost of transportation which is to be included as a deduction is the transit transport insurance covering transportation of the goods from the factory gate to the place or places of delivery. 4. Where a company has more than one factory located at different places and the prices at the depots is the same irrespective of the lack of identification of the goods from a particular factory of production, the deductions as set out in this judgment and as explained in this order shall be computed and allowed on the basis of such price. 5. This order shall be by way of clarification of the judgment delivered on 7th October, 1983. 6. The matters shall also be listed on 18th November, 1983 and shall be heard in court at 2 p.m.
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