Customs, Excise and Gold Tribunal - Tamil Nadu
Kwality Biscuits Ltd. vs Commissioner Of C. Ex. on 21 December, 1999
Equivalent citations: 2000(117)ELT380(TRI-CHENNAI)
ORDER V.K. Ashtana, Member (T)
1. This is an appeal against Or-der-in-Appeal No. 133/91, dated 15-5-1991 wherein the Ld. Commissioner (Appeals) upheld the order-in-original with respect to disallowance of van allowance on monthly basis as well as lorry upkeep expenses as admissible deductions from the assessable value of biscuits cleared by the appellants under Section 4 of the Act. The order-in-original was dated 12-11-1984 and had disallowed the monthly van allowance on the following grounds :-
(a) that the said allowance claimed as deductions on monthly basis was not declared as available to all buyers whereas the appellants' circular dated 1-7-1978 had only mentioned quarterly allowance as available as discount.
(b) that the said allowance has not been uniformly given to all buyers but has been restricted to a selected few.
2. The order had disallowed the lorry upkeep expenses on the following grounds :-
(a) These do not reflect the cost of transportation of excisable goods but are charges of different nature.
(b) The amounts claimed includes trips made by the lorries from the factory gate to the retailers site, whereas deductions for freight is only available upto the wholesale stage.
(c) that such charges having not been shown in the assessee's invoices and therefore there is no correlation of these deductions claimed with the consignment cleared.
3. Heard ld. Advocate for appellants who submits that as far as van allowance is concerned, it is illogical to deny the same when claimed on monthly basis when a similar allowance was allowed when claimed on quarterly basis. As far as lorry upkeep expenses are concerned, he submits that it has been submitted before the original authority and the first appellate authority by even producing trip sheets etc. that the entire cost claimed as deduction pertained to only transportation of biscuits by the lorries owned by the appellants and that these were not used for any other purpose. He submits that when the appellants acting as transporters had incurred these sums to run these lorries to transport the biscuits to the buyers, then such deductions were nothing else but freight charges. He submits that price charged in the invoice should be regarded as cum freight price and the deductions should be given working backwards.
4. Ld. DR on the other hand submits that van allowances have been allowed on quarterly basis as trade discount. He submits that availability of trade discount is dependent on, inter alia, (a) the deductions are known as available to all the buyers (b) that the said discount should be given uniformly to all buyers in a particular class. In this case, the original authority as well as the first appellate authority have clearly found that as far as the quarterly allowances were concerned, in view of appellants' own circular, it was made known to all the buyers but as far as the monthly allowances are concerned, the said circular having not been referring such monthly allowance, and there being no mention of the invoices also, therefore, same was not made known to all the buyers. In addition, the said discounts were not given to all the buyers but only to a selected few. Therefore, the two tests for availability of these allowances as trade discount are not met by the facts of this case and hence there is no infirmity in the order impugned. As far as the lorry upkeep expenses are concerned, ld. DR submits that even if these are in the nature of expenses borne by the appellants to maintain lorries which were used to transport the excisable goods namely biscuits, the nature of these deductions claimed are different from those of freight. It is not appellants' case that in each invoice an estimated freight was charged and shown separately. On the other hand, at the end of Financial Year, appellants now seek on the basis of their balance sheet to claim lumpsum deductions. Such lumpsum deductions is different from freight charged consignment-wise from different buyers. Therefore, he submits that there is great force in the findings of the original authority that since these charges were not reflected in any of the invoices, therefore there is no correlation and nexus established with respect to excisable goods transported. Therefore, he submits that on this count, there is no infirmity in the order impugned . Hence, he prays that appeal be dismissed.
4. We have carefully considered the rival submissions and records of the case. As far as denial of van allowance on monthly basis, we find that the said allowance is claimed as trade discount and therefore it should fulfil the test laid down with respect to such a discount. The two of the essential tests inter alia which are now laid down by law are (a) the said discount should be declared as available to all and there should be documentary evidence to show this and (b) that said discount should be given to all buyers and not selectively. Ld. Advocate has not been able to meet these objections in his submissions above and therefore we hold that since these two tests having not been fulfilled by the appellants, there is no infirmity in the orders of the lower authorities on this count.
5. As far as the denial of lorry upkeep expenses, we find that there are a number of infirmities in this claim. Firstly, the deductions claimed are after the end of a Financial year and as per the expenses incurred as reflected in the balance sheet. Under Section 4, freight charges can only be claimed on the basis of each consignment of excisable goods cleared. In this case, there is no correlation between the deductions claimed and the consignment of excisable goods removed from the factory gate. Therefore, it cannot be held that these deductions are in effect claim for freight charges. The correct procedure which should have been adopted was that on the basis of earlier calculations, the appellants should have shown in each invoices the element of freight charges collected in the price by mentioning the quantum as well as the fact of such collection on the invoices. The invoices are silent on this issue. Therefore, we do not find any infirmity in the orders and decisions of the lower authorities on this count also.
6. In view of the aforesaid analysis and findings, we do not find any merit in this appeal and same is dismissed.