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2001 (1) TMI 84 - SC - Central ExciseWhether Bank charges for collection of sale proceeds and discount for damages are allowable deductions in computing the value of the manufactured goods under Section 4 of the Central Excises and Salt Act, 1944? Held that:- 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 admittedly on account of damages suffered by goods after removal from the factory. Thus a compensation in the nature of warranty allowance on a defective tyre". The finding of the Tribunal on this issue therefore cannot be sustained. On the question of bank charges, however we are of the view that bank charges being in the nature of post clearing expenses are deductible while calculating the assessable value of the goods. In Assistant Collector of Central Excise and Others v. Madras Rubber Factory (supra) and Shriram Fertilizers & Chemicals v. Union of India [1997 (3) TMI 112 - SUPREME COURT OF INDIA] and Government of India and Others v. Madras Rubber Factory Ltd. and Others [1995 (5) TMI 28 - SUPREME COURT OF INDIA] this Court has held that interest on receivables earned on account of the time lapse between the delivery of the goods and the realisation of the monies is deductible from the assessable value of the goods at the time of removal from the respondents' factories. For the same reason, bank charges included in the price on account of clearance of outstation 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. The Tribunal had, as such, correctly allowed this deduction. Thus the appeals are allowed to the extent of disallowing the respondents' claim for deduction on account of damage discount and dismissed in so far as the respondents' claims for deduction of bank charges are concerned. There will be no order as to costs.
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