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TMI Blog2011 (2) TMI 548X X X X Extracts X X X X X X X X Extracts X X X X ..... claims for the reason that the assessee had not informed the department prior to the clearance of the goods about the impugned discounts allowed to the dealers and the assessee entering into agreements with the dealers to allow such discounts. The respondents had given such intimation only in respect of its sister unit, operating in the DTA. In allowing the appeal filed by the respondents, the lower appellate authority followed the decisions of the Tribunal in Mahavir Spinning Mills Ltd. v. Commissioner [2007 (207) E.L.T. 94 (Tri.-Del.)]; CCE, Coimbatore v. Texmo Industries [2008 (226) E.L.T. 375 (Tri.-Chennai)] and C.C.E.&C., Vadodara v. Alembic Ltd. [2009 (233) E.L.T. 534 (Tri.-Ahmd.)]. As per these authorities, once discount was known at the time of clearance, the same had to be allowed. The case before him was squarely covered by the above decisions. 2. In the appeal filed before us, Revenue has raised the following grounds : (i) As per para 2.5 (2) (iv) of Part 3 of Chapter 3 of CBEC's Excise Manual of Supplementary Instructions, 2005, "Where the assessee claims that the discount description for a transaction is not readily known but would be known only subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls Ltd. case in deciding Texmo Industries case (supra). M/s. Alembic Ltd. case dealt with rejection of refund claim on the grounds of 'non-correlation or limitation'. Sales had been effected from the depots and the assessee was required to show the element of duty in the invoices. They were showing only all inclusive price in the sales invoices. (v) In the instant case, the offer of timely payment incentive was communicated to the dealers as per the agreement but not through the Central Excise invoices issued at the time of clearance of the goods. The assessee had first collected the undiscounted value and duty from the dealers and then gave back the timely payment discount at a later date. Further, since the assessee had first collected the invoice value (undiscounted) from the dealers, the dealers should have certainly collected the undiscounted amounts from their customers. Thus the assessee was first allowing the dealers to collect the un-discounted value from their customers and by passing on the discounts at a later date, they were enriching the dealers by taking the duty burden onto themselves and were approaching the department for refund of the duty burden. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Central Excise, the assessee company communicated the above revision in the pattern of allowing discount to the dealers. They had intimated that the additional trade discount would be allowed by raising credit note to the dealers and it would be claiming refund in respect of the duty paid on that portion of the value. Along with the letter, they also enclosed a list of the dealers and copies of the dealership agreements with them. In this letter dated 22-6-2006, they had indicated for reference only the Central Excise Registration assigned to its DTA unit. Later, the assessee claimed refund of an amount of Rs. 4,75,301/- being Central Excise duty and Cess involved on timely payment discount offered by its DTA unit to dealers for the period April 2008 to September 2008. In the Order-in-Original No. 32/2009 dated 3-3-2009, the Assistant Commissioner examined the merits of the claim and found that the claim was towards incentive offered on invoice value for the timely payment made by the dealers in terms of the agreements entered into between the assessee and the dealers. Though the commercial invoices did not reflect the incentive in the form of discount, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e claim that the original authority had relied on the judgment of Hon'ble High Court of Mumbai in the case of M/s. Oriental Explosives Pvt. Ltd. (supra), we find that in the said case, the assessee had reduced the price of the goods sold after clearance and sale on payment of duty. We also find that in MRF Ltd. case [1997 (92) E.L.T. 309 (S.C.)], the facts were somewhat similar to Oriental Explosives Pvt. Ltd case. After clearance and sale of goods on payment of duty with reference to the classification and price, indicated by the assessee at the time of removal, MRF had sought refund of duty paid on that part of the value which the Government had reduced retrospectively in its agreement for purchase from MRF Ltd. The Apex Court found that no refund could be sanctioned in cases where after clearance of goods on payment of duty, assessee and its customers negotiated and agreed for a lower price. In Mahavir Spinning Mills Ltd. case, relied on by the Commissioner (Appeals) while passing the impugned order has since been affirmed by the Apex Court vide its order reported as Commissioner v. Mahavir Spinning Mills Ltd. [2007 (212) E.L.T. A152 (S.C.)]. In Mahavir Spinning Mills Ltd. case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the findings recorded by the Assistant Collector, it must be held that this is a discount which is known and understood at the time of removal of the goods though it is quantified later. The Assistant Collector has also recorded a finding, "I also find that such system of grant of discounts is not uncommon in the trade". Keeping in view the clarificatory Order of this Court in Bombay Tyre International, this claim must be held to have been rightly allowed by the Assistant Collector. Year Ending Discount and Prompt Payment Discount : 59. What is called 'Year-ending discount' is really a bonus given by Madras Rubber Factory to its dealers @ Rupees fifty per tyre in respect of a particular type of tyres. This discount is payable only where the payments are actually received within forty five days from the date of the invoice. Under this scheme, it appears that a declaration is to be received dealer-wise and thereafter provision is to be made at the head office of MRF for the bonus. The Assistant Collector has found that this discount was allowed by the assessee not out of any extra-commercial considerations but that they were meant only to boost the sales particularly in the y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count along with the year ending discount and allowed it on the same reasoning as is applicable to the year ending discount. 62. In view of the findings recorded by the Assistant Collector and the clarificatory order in Bombay Tyre International this claim too must be held to have been rightly allowed by the Assistant Collector." Their lordships had ordered that prompt payment discount did. not form part of the assessable value in terms of Section 4. We find that in an arms length transaction, conditions for payment & delivery remaining same, the value for assessment of excisable goods did not undergo change on introduction of the 'transaction value'. The relevant value is the net consideration exchanged for delivery of the goods at the place of removal in an arms length transaction. We find that in the circumstances, the above observations of the Apex Court apply equally to the transaction value post 30-6-2000. The assessable value of the excisable goods has all along been the total consideration received by the manufacturer of excisable goods from the buyer. This will not include the discount allowed. In the instant case, there is no dispute that prompt payment discounts h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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