Judgment:
1. The prayer of the appellants in this appeal is that while determining the assessable value of their electric fans, commission, cost of wooden crate (special secondary packing) and cost of regulator should not be included.
2. We have heard both sides and have carefully considered the matter.
We record our findings and order on each of the aforesaid three items.
The appellants pay this commission to an agent for the services rendered by them in procuring orders from Government departments.
The agent is not the actual buyer of the fans but is a third party.
The commission pay to him is not in the nature of trade discount given to dealers or wholesale buyers. The appellants sought reliance on the Supreme Court judgment reported at 1986 (23) ELT 8(SC) - Moped India Limited v. Assistant Collector of Central Excise, Nellore and Ors., paragraph 6. But we find from this judgment that it dealt with commission paid to dealers who were not agents of the assessee in that case. This judgment, therefore, does not apply to the facts of the appellants' case. The Supreme Court judgment which specifically applies to commission paid to an agent is the one reported at 1984 (17) - ELT 607 (S.C.) - Coromandel Fertilizers Limited v. Union of India and Ors.. In terms of this judgment, the commission paid to the appellants' agent for procuring orders is not a trade discount, notwithstanding the appellants' pleading that no part of this commission flows back to them. We, therefore, uphold the lower orders disallowing deduction of this commission.
Fans manufactured by the appellants are first wrapped in polythene sheets which are then placed inside card board cartons. This is their normal type of packing in which about 70% of their sales are made to local buyers. However, for the remaining about 30% sales made to out station buyers, the appellants use wooden boxes or crates over and above the card board carton packing. Their prayer is that this wooden box is in the nature of a special secondary packing resorted to for the safe transport of the goods and it should, authorities do not seriously dispute that the wooden boxes is used for ensuring safe transport of the electric fans to out station buyers. In principle, therefore, the cost of wooden crate is deductible for arriving at the assessable value in terms of the Supreme Court judgment reported at 1985 (22) ELT 306 (S.C.) - Union of India and Ors. v. Godfrey Philips India Ltd. and Ors.. However, we find that the appellants charged the same price from the local customers as well as the out station buyers, irrespective of the type of packing used. In other words, the price as charged to local buyers for delivery of fans in the normal card board cartons packing is also the price charged to out station buyers even though the wooden crate is used over and above the card board carton to pack the outstation delivery fans. In the circumstances, since the cost of wooden box is not added to the sale price charged to the out station buyers, the question of deduction of such cost would not arise. Any notional deduction would render the sale price to out station buyers lower than the one charged to local buyers in card board carton packing. This cannot be done because when the out-station buyers get the same fans with card board carton packing, they should pay the same price as others are paying at the place of removal for the identical fans in identical card board carton packing. We, therefore, reject the prayer for deduction of the cost of wooden crate.
The appellants relied on Delhi High Court judgment reported at 1984 (24) ELT 526 (Delhi) and certain rulings of this Tribunal. But they conceded that this judgment and the rulings related to pre - 18.6.1977 period when tariff item 33 read differently. With effect from 18.6.1977, this tariff item was specifically amended to include regulators along with fans in the tariff item/sub-items. The earlier judgment and the rulings cannot, therefore, apply when the law itself underwent a change. The amended tariff makes it abundantly clear that regulators go along with the fans and their cost has, therefore, to be included in the assessable value of the electric fans whenever regulators are supplied with the fans. The material period in the present appeal is from 1.7.1980 to 10.11.1983, i.e., after 18.6.1977. There is, therefore, no question of deducting the cost of regulators.
3. In the result, we uphold the impugned orders in so far as they relate to the above three items and reject the present appeal.