2001 (9) TMI 467 - AT - Central Excise

Summary

Issues:
Whether the turnover discount granted by M/s. Samtel India Ltd. to their customers is to be deducted from the assessable value.

Analysis:
The appeal filed by M/s. Samtel India Ltd. raised the issue of whether the turnover discount offered to customers should be deducted from the assessable value. The appellant contended that the discount was known to customers at the time of goods removal, even though the exact quantum was determined later through Credit Notes. They argued that the discount should be allowed as per the Supreme Court's ruling in UOI v. Bombay Tyres International, emphasizing that buyers were aware of the discount's availability before goods removal. The appellant also highlighted the established practice of granting turnover discounts, supported by the decision in CCE, Meerut v. Pashupati Acrylon Ltd. The appellant further argued against the time-barred demand for duty, citing compliance with price declarations and monthly statements detailing discounts offered.

The Department countered, asserting that the discount was not disclosed to customers or the Department, constituting suppression justifying invoking Section 11A. They argued against the admissibility of the discount, citing inconsistency in discount norms evidenced by monthly charts. The Department contended that penalties under Section 11AC and Rule 173Q were applicable due to duty underpayment from fact suppression, emphasizing no mens rea requirement for Rule 173Q penalties. They referenced the decision in CCE v. H.M.M. Ltd. to support penalty imposition in case of demand non-sustainability due to limitation issues.

Upon analysis, the Tribunal referenced the Supreme Court's ruling in Bombay Tyres International, emphasizing that discounts known at or before goods removal could be deducted from the sale price. However, the Tribunal found no evidence of an agreement or established practice for discount allowance. While acknowledging that the exact discount quantum might not be known in advance, the Tribunal ruled that the percentage of discount must be disclosed before goods removal. Consequently, the Tribunal disallowed the discount deduction from the assessable value. Notably, the Tribunal deemed the extended period inapplicable due to the Department's awareness of discounts through monthly statements and price declarations, leading to a duty liability for a specific period. As no suppression of facts was found, penalties under Section 11AC and Rule 173Q were set aside based on the interpretation of Section 4(4)(d)(ii) of the Central Excise Act.

In conclusion, the Tribunal disposed of the appeal by denying the deduction of turnover discount from the assessable value, limiting duty liability to a specific period, and setting aside penalties under Section 11AC and Rule 173Q due to the absence of fact suppression.