NDLI: Assistant Collector of Central Excise & Others Etc. Vs. Madras Rubber Factory Ltd.

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Excise duty-Valuation of excisable good
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Central Excise Act, 1944 (1 of 1944)
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Disposed Off
Headnote	Central Excise and Salt Act, 1944: Section 4; Central Excise Rules, 1944: Rule 96; Central Excise (Valuation) Rules, 1975: Rule 4.Excise duty-Valuation of excisable goods-'Assessable Value'- Determination of-TAC/Warranty, product discount, overriding commission, duty paid on processed tyre cord, secondary packaging cost, interest on goods after removal from factory gate till date of sale, interest on receivables, cost of distribution at duty paid sales depots-Deduction of-Whether permissible and valid. Lower price for Government Departments-Whether normal price. Computation of assessable value in a cum-duty price at factory gate-Permissible deductions should first be deducted. In Union of India v. Bombay Tyres International Ltd., [1984] 1 SCR 347, this Court held that under s.4 of the Central Excise and Salt Act, 1944, only those expenses which, were incurred on account of factors contributing to the product's value upto the date of sale or the date of delivery at the factory gate were liable to be included in the assessable value. On November 14/15, 1983 the Court made a clarificatory order wherein it was stated that discounts allowed in the trade (by whatever name called) 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, and that such allowance and the nature of discount should be known at or prior to the removal of the goods and should not be disallowed only because they were not payable at the time of each invoice or deducted from the invoice price. The respondent-Rubber Factory claimed various deductions of the nature of post-manufacturing expenses for determining the assessable value of their products under s.4 of the Act which were disallowed by the Excise authorities. Its writ petitions were, however, allowed by the High Court.In appeals by the Union of India for setting aside the High Court judgment it was contended for the respondent: (a) that the TAC/ Warranty discount, which was sought to be deducted for determining the assessable value, satisfied all the criteria of a trade discount stipulated in the clarificatory order; (b) that the claim for deduction of product discounts-prompt payment discount, year-ending discount and campaign discount-was justified on the same reasoning; (c) that the interest on finished goods from the date the stocks were cleared till the date of sale was a proper deduction for determination of the assessable value; ( d) that the claim for deduction or interest on receivables (sundry debtors for sales) was justified on the ground that this cost was inbuilt in the price and was incurred on account of the time factor between the delivery of goods and realisation or moneys; (e) that the overriding commission allowed to the Hindustan Petroleum Corporation for exclusive sale of company's products through their dealer net work was also of the nature of a discount; (f) that the cost of distribution at the duty paid sales depot was a proper deduction; (g) that the difference between the lower price at which the product was sold to the Government and the price charged from ordinary dealer was of the nature of a discount; (h) that the claim for deduction of special secondary packaging charges squarely falls within s.4(4)(d)(i) of the Act, and (i) that the company was entitled to the deduction of excise duty paid on processed tyre cord under s.4(4)(d)(ii). The respondents also disputed the method of computation of 'assessable value' in a cum-duty price at a factory gate sale and contended that such value was to be arrived at by first deducting the predetermined excise duty added to the factory price and only there after the permissible deductions were to be deducted.
Judge	Honble Mr. Justice P.N. Bhagwati
Neutral Citation	1986 INSC 285
Petitioner	Assistant Collector Of Central Excise & Others Etc.
Respondent	Madras Rubber Factory Ltd.
SCR	[1987] 1 S.C.R. 846
Judgement Date	1986-12-20
Case Number	3195

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