COMMISSIONER OF CENTRAL EXCISE, NEW DELHI versus VIKRAM DETERGENT LTD.

Citation: [2001] 1 S.C.R. 392 · Decided: 16-01-2001 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
COMMISSIONER OF CENTRAL EXCISE, NEW DELHI 
v. 
VIKRAM DETERGENT LTD. 
JANUARY 16, 2001 
B 
[S.P. BHARUCHA, DORAISWAMY RAJU AND RUMA PAL, JJ.) 
Excise Law: 
Central Excises and Salt Act, 1944: 
c 
Section 4(2f-Assessable value of goods-Bank charges and aunfi:ige 
discount-Deductibility of-Assessee engaged in packing of detergent powder 
received from manufacturer-After packing, goods were sold to wholesale 
buyers known as Redistribution Stockists-Assessee claimed deduction of 
damage. discount and bank charges on outstanding cheques from the price 
D charged in arriving at the assessable value of the good~-Tribunal allowed 
the deduction-Validity of-Held: Dam11ge discount is to compensate the· 
buyer and, therefore, cannot be allowed as deduction-However, bank charges 
being in the nature of post clearing expenses are excludible from the price 
of goods while calculating the assessable value of goods. 
E 
F 
Words and Phrases: 
"Damage discount"-Meaning of 
The respondent was engaged in the packing of detergent powder received 
by it from the manufacturer. After the goods were packed, they were cleared 
from the factory by the manufacturer and sold through its clearing and 
forwarding agents from their depots all over the country to wholesale buyers 
who were known as Redistribution Stockists. The respondent elaimed 
deduction on account of damage discount and bank charges on outstation 
G cheques from the price charged in arriving at the assessable value of the 
goods for the purpose of excises duty under Section 4 of the Central Excise 
and Salt Act, 1944. The Customs, Excise and Gold (Control) Appellate 
H 
Tribunal allowed the deduction. Hence this appeal. 
Allowing the appeal, the Court 
392 
C.C.E. v VIKRAM DETERGENT LTD. 
393 
l-IELD: I. The "normal price" in this case, would have to be determined A 
with reference to the time and place of removal of the goods from the 
respondent's factory. Since the price was fixed with reference to the sale at 
the depots to the Redistribution Stockists, clearly in terms of Section 4(2) 
of the Central Excises and Salt Act, 1944, the respondent would be entitled 
to deduction of the cost of transportation from the factory to the selling B 
depots. 1396-F-G; 394-CI 
Union of India v. Bombay Tyre International Ltd., 119841 1 SCC 467; 
AssiJtant Collector Central Excise v. Madras Rubber Factory Ltd., 119861 
Supp. SCC 751; Govemment of l11dia v. Madras Rubber Factory Ltd., 119951 
4 SCC 349 and CC£, Meerut v. Swya Roshni Ltd., (2000) 122 ELT 3 (SC), C 
retied on. 
2. The object of"damage discount" is to compensate the buyer for the 
damaged goods and logically compensation for damaged goods could not 
feature as a relevant consideration for determining the price of the goods 
as manufactured at the time of clearance of the goods. The 'discount' is D 
admittedly on account of damages suffered by goods after removal from the 
factory. 1397-DI 
3. The bank charges being in the nature of post clearing expenses are 
deductible while calculating the assessable. value of the goods. Therefore, 
bank charges included in the price on account of clearance of outstation E 
~ 
cheques cannot form part of the price of the goods at the time of removal and 
are as such excludible from the price while calculating the assessable value 
of the goods. 1397-G; 398-BI 
Assistant Collector of Central fa·cise v. Madras Rubber factory Ltd., 
119861 Supp. SCC 751; Shriram Fer1tlisers & Chemicals v. Union of India, p 
119971 96 ELT 12 (SC) and Government of India v. Madras Rubber Factory 
Ltd .. 119951 4 sec 349, relied on. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2579 of 
2000. 
From the Final Order No. 1333/99-A, dated 17 .09 .1999 in Appeal No. El 
-" 
2776/98-A passed by the Customs, Excise and Gold (Control) Appellate 
Tribunal, New Delhi 
With 
C.A. No. 3160 of2000. 
G 
H 
A 
B 
394 
SUPREME COURT REPORTS 
[2001 J 1 s.c.rc 
Soli J. Sorabjee Attorney General, Harish N. Salve Solicior General, Rajiv 
Nanda, Ms. Nisha Bagchi, Dileep Tandon, Ms. Smita Inna, B.K. Prasad, P. 
Parmeswaran, S. Ganesh, Ravinder Narain and Vikram Singh for J.B.D. & Co. 
for the appearing parties. 
The Judgment of the Court was delivered by 
RUMA PAL, J. In both these appeals, the appellant has challenged the 
decision of the Customs, Excise and Gold (Control) Appellate Tribunal holding 
that bank charges for collection of sale proceeds and discount for ·damages 
are allowable deductions in computing the value of t

Excerpt shown. Read the full judgment & AI analysis in Lexace.