TMI Blog1986 (12) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... hird respondent is Collector, Central Excise and Customs, Nagpur. The Fourth and Fifth respondents are the Assistant Collector and Superintendent of Excise and Customs concerned with the relevant orders. 3. Under the decisions rendered by the Supreme Court as well as various High Courts in India, the assessable value of the goods had to be based on the manufacturing cost plus manufacturing profits of the goods. This was as per the interpretation of the old Section 4 of Central Excises and Salt Act, 1944. In other words, from the wholesale cash price all elements of cost pertaining to non-manufacturing or post manufacturing operations (P.M.E. and P.M.P.) had to be excluded. Reference may be made to A.K. Roy v. Voltas 1977 E.L.T. (J 177) = (A.I.R. 1973 S.C. 225). In 1975, however, the High Court of Bombay in India Tobacco Co. v. Union of India 1979 E.L.T. (J 476) held that under old Section 4 of the Act assessable value of the goods had to be based on the manufacturing cost and manufacturing profit. Various P.M.E. were held to be deductible from the wholesale cash price. This was also the view taken by number of High Courts in India, except Gujarat and Punjab. 4. The old Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealers even if described as such would be a "trade discount" and permitted as a deduction under new Section 4, provided however that the dealings were on a principal to principal basis at arm's length. 8. It would thus be observed and as rightly contended by Shri Hidayatullah for the petitioners that the petitioner Company had filed their price-list and claimed assessment on the value of different types of papers manufactured on the manufacturing cost and manufacturing profit as per the law laid down up to that date. Yet, however, the Assistant Collector by the first order of assessment dated 8-1-1981 rejected the price-list of the petitioner Company and it was this order which was initially impugned by the petitioner. 9. This Court passed interim orders dated 14-12-1981 and 13-1-1982 allowing the petitioner to clear its goods on the basis of assessable value declared in the price-list from time to time. The petitioner company has not only paid most of the taxes on the said basis, but has also furnished Bank Guarantees amounting to over Rs. 3 crores. 10. After section was amended in 1975 and during the pendency of the Court case, the Supreme Court having delivered its judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ept of a related person. The principal to principal basis has been categorically stated in Moped India case by the Supreme Court. The terms and conditions of the transactions are found on the reverse of the invoices raised by the petitioner Company. All risk is to be borne by the dealers after delivery of goods to carriers. All documents and bills are to be retired by the dealers through Banks. It is in these circumstances, we find that the second impugned order in respect of the dealers commission will have to be struck down. The ground that the dealers commission was not reflected in the invoices is also irrelevant now in view of the classificatory order of Supreme Court in Bombay Tyres International case reported in 1984 (17) E.L.T. 329 which expressly holds that the discount need not be reflected in the invoices or be given at the time of delivery of goods. 16. Insofar as deductions on the ground of additional discount is concerned, the Assistant Collector has drawn aspersions on the petitioners by stating that the additional discounts were given in June 1983 taking the benefit of the Supreme Court judgment. We do not find that this allegation has any justification. We have a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employed by the petitioners, in our view, falls under category (f) and its cost is permissible as a deduction. The second impugned order, therefore, also deserves to be struck down on this ground. 20. Having held that the second impugned order suffers from various irregularities and illegalities particularly because of non-application of the relevant case law, we have no hesitation to hold that the same deserves to be struck down in its entirety. It must, however, be observed that the Assessing Authority should re-assess the duty payable after the due verification of all the items from the account books of the petitioner company in respect of those deductions which are not directly reflected on the invoices. If necessary, the Assessing Authority may have a cross check on the relevant dealers accounts books. The claim for deduction of the petitioners on the ground of dealer's commission, additional discounts or discounts not shown in invoices and secondary packing, therefore, deserves fresh consideration and re-assessment. 21. Lastly, it must also be observed that apart from directing reassessment after due verification in the light of the law as declared the second impugned ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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