LexTHE GOVT. OF INDIA AND ORS. ETC. versus THE MADRAS RUBBER FACTORY LTD. ETC.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
THE GOVT. OF INDIA AND ORS. ETC.
A
v.
'
I
THE MADRAS RUBBER FACTORY LTD. ETC.
.
MAY 3, 1995
[B.P. JEEVAN REDDY, SUHAS C. SEN, G.T. NANAVATI, JJ.]
B
Central Excises and Salt Ac~ 19#-S. 4(1)(a) read with s.4(2)--Deter-
mination of assessable value-Post-removal expenses, deduction of-Goods
sold in course of wholesale trade not at place of removal but at depots outside
factory gate-Held, expenses in maintaining depots cannot be deducted from C
price; cost of transportation, cost of insurance on freight deductible.
Central Excises and Salt Act 19#-S.4(4)(d)(i)--Determination of
assessable value-Post-removal expenses, deduction of-<:ost ofpacking-
Held, is liable to be included in the value if such packing is necessary for
putting the excisable article in condition in which sold in wholesale market.
D
Central Excises and Salt Ac~ 19#-S.4(4)(d)(ii)--Determination' of
f
assessable value-Post-removal expenses, deduction of-Trade dis-
.counts-Whether 'Tyre Adjustment Committee' (TAC)/WlllTanty discount is
a trade discount that is deductible-Held, no; is only a claim for refund by E
buyer for manufacturing defect in goods . .
Central Excises and Salt Act, 19#-S.4(4)(d)(ii)--Determination of
assessable value-Post-removal expenses; deduction of-Trade dis-
counts-7'1ssessee granting dealers one per cent turnover discount on half
yearly basis depending on volume of purchases made by dealer-Held, is a F
discount known and understood at time or removal and hence deductible. .
Central Excises and Salt Ac~ 19#-S.4(4)(d)(ii)--Determination of
assessable value-Post-removal expenses, deduction of-Trade dis-
count.s-Assessee granting dealers year-ending discount and p,rompt payment
discounHfeld, deductible since this system of discount is prevalent in the G
industry.
Central Excises and Salt Ac~ 19#-S.4(1)(a)--Determination of asses-
sable value-Post-removal expenses, deduction oHnterest on fmished
goods-Held, not deductible.
H
1143
1144
SUPREME COURT REPORTS
(1995] 3 S.C.R.
A
Central Excises and Salt Act, 1944-S.4( 1)( a}-Determination of asses-
sable value-Post-removal expenses, deduction of-interest on receiv-
ables--Held, being amount received subsequent to sale from the depots is
excludible from value and hence deductible
Central Excises and Salt Act, 194<f-S.4(l)(a) read with s.4(4)(d)(ii)
B Explanation II-Computation of assessable value in a cum-duty price-Held,
decision in Assl Coll. of Central Excise v. Madras Rubber Factory, represents
co"ect view.
Words and Phrase~'Post-manufacturing expenses'-Held, is a legally
C inaccurate expression; post-removal expenses is more apt.
Consequent upon the judgment in Union of India & Ors. v. Bombay
Tyre international Ltd., (1984] 1 SCR 34, where this court enunciated the
principle governing the interpretation of S.4 of the Central Excises and
Salt Act, 1944 ('Act'), the Assistant Collectors (Central Excise) forwarded
D to this court orders allowing certain claims of the assessees for deductions
while disallowing certain others. The appeals were initially disposed of by
this court Assistant Collector of Central Excise & Ors. v. Madras Rubber
Factory Limited & Ors., (1987) 2 E.L.T. 553 but subsequently restored for
hearing after the Review Petition by the Revenue was allowed.
E
F
MRF claimed that in respect of sales made at depots outside the
factory gate, the price charged included the charges for transportation as
also the expenses incurred in maintaining the depots apart from insurance
and storage charges. Since these were post-removal expenses ought to be
deducted from the price charged at the depot to arrive at the price charged
at the place or removal in the course or wholesale trade. Alternative, the
department could accept the price at which MRF sold its goods to the
government at the factory gate as the normal price or all goods.
The Revenue disputed the deduction allowed to MRF in respect of
special secondary packing for tread rubber, Tyre Adjustment Committee
G (TAC)/ Warranty discount, one per cent turnover discount, year-ending
and prompt payment discount. Hindustan Lever's claim for deduction in
I
respect or 'outer packing' or cartons and cardboard boxes for their soaps
~-
was disallowed by the Assistant Collector. Tata Chemical Claimed deduc-
tion in respect or cost or packing or the goods in jute and polythe11e bags
H as well as drums.
t
GOVT. OFINDIAic MADRAS RUBBER FACTORY LTD.
1145
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