TMI Blog2011 (2) TMI 548X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of the excisable goods has all along been the total consideration received by the manufacturer of excisable goods from the buyer - Decided in favor of the assessee - E/945/2009 - 88/2011 - Dated:- 3-2-2011 - S/Shri M.V. Ravindran, P. Karthikeyan, JJ. REPRESENTED BY : Shri K.S. Chandrasekharan, JDR, for the Appellant. Shri K. Vijaya Kumar, Advocate, for the Respondent. [Order per : P. Karthikeyan, Member (T)]. This is an appeal filed by the Revenue. Vide the impugned order, the Commissioner (Appeals) vacated the order of the original authority and allowed refund of differential duty claimed by the respondents, a 100% E.O.U. The respondents are engaged in the manufacture of leather finishing chemicals falling under Chapter heading Nos. 29, 32, 34, 38 39 of the Central Excise Tariff Act, 1985. They filed two applications for refund of an amount of Rs. 2,22,579/- and another amount of Rs. 1,93,956/- being duty relatable to timely payment discounts allowed to their dealers respectively for the period from June 2007 to March 2008 and from 21-12-2007 to 30-6-2008. After due process of law, the original authority rejected the refund claims for the reason that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d held that the duty due on the reduction in price was not admissible. The Hon ble Supreme Court in the case of MRF Ltd. v. CCE, Madras [1997 (92) E.L.T. 309 (S.C.)] had held that : Once the assessee has cleared the goods on the classification and price indicated by him at the time of the removal of the goods from the factory gate, the assessee becomes liable to payment of duty on that date and time and subsequent reduction in prices for whatever reason cannot be a matter of concern to the Central Excise Department insofar as the liability to payment of excise duty was concerned. Therefore, subsequent fluctuation in the prices of the commodity can have no relevance whatsoever so far as the liability to pay excise duty is concerned, unless it is shown that there was some agreement in this behalf with the Government and the latter had agreed to refund the excise duty to the extent of the reduced price. (iv) The Commissioner (Appeals) had erred in relying on the decision of the Tribunal in Mahavir Spinning Mills Ltd. (supra) which was pending in appeal before the Apex Court. The Tribunal had followed the ratio of Mahavir Spinning Mills Ltd. case in deciding Texmo Industries case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the event of credit given subsequent to the clearance of the goods, the assessee will continue to remain eligible to the refund, if available in terms of Section 11B. 3. We have heard both sides. 4. We have carefully examined the case records and studied the submissions by both sides. The respondents manufactured various leather chemicals and sold them through a network of dealers. The respondent company has two units. The respondent herein, one of the two units, is an E.O.U. The respondent company used to allow trade discount of 14% on its selling price to dealers till 31-3-2006. The assessee revised its agreement with the dealers by splitting the 14% discount into 11% allowed at the time of clearance of the goods and the balance 3% to be allowed on receipt of payments from the dealers by the due date. They had linked this part of discount for timely payment considering that some of the dealers were failing to make prompt payment. In cases where the respondents were not paid in time, additional discount of 3% was not allowed to the dealers. Vide letter dated 22-6-2006, addressed to the jurisdictional Assistant Commissioner of Central Excise, the assessee company communicated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original authority. 6. On going though the various grounds raised in the appeal, we find that the main ground raised is that as per the instructions contained in 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 subsequently, as for example, year end discount, the assessment of such transactions may be made on a provisional basis. However, the assessee had to disclose the intention of allowing such discount to the department and make a request for provisional assessment. The Revenue s claim is that the assessee had failed to follow these instructions. We observe that these instructions are not such that failure to follow them disentitle an assessee to abatement of duty liability on such discounts as long as the nature of discount is known at the time of clearance of the goods and are irrevocably allowed to the customer. Yet another ground is that the refund was admissible if only the same had not been passed on to the dealers/customers. We note that this could be verified. As for the claim that the original authority had relied on the judgment of Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on as a matter of fact. It is well settled that time of granting discount is not relevant for the purpose of determining whether the discount is to be allowed for the purpose of deduction. Thus, this discount satisfied all the requirements of being known at the time of clearance of the goods as well as not being returnable for any reason. 6.1 It is obvious from the above paragraph that the facts of the Mahavir Spinning Mills Ltd. case (supra) were not different from those of the case in hand. It was also a case where the fact of allowing discount was known at the time of sale of the goods by the assessee. M/s. Texmo Industries Ltd. case (supra) of the Tribunal relied on had been passed following Mahavir Spinning Mills Ltd. case decision. The Commissioner (Appeals) had not erred in relying on these authorities in passing the impugned order. 6.2 In Govt. of India v. MRF Ltd., 1995 (77) E.L.T. 433 (S.C.)], the Apex Court made the following observations in paras 58 to 62 while dealing with abatement of similar discounts not allowed at the time of clearance of the goods. 58. In the light of the findings recorded by the Assistant Collector, it must be held that this is a discoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion that the said reasoning cannot be accepted in view of the clear finding recorded by the Assistant Collector that this system of discount is prevalent in the industry and is known and understood at the time of removal of particular goods, though the amount is quantified later. In view of the said finding and in the light of the clarificatory Order in Bombay Tyre International, we hold that this claim has been rightly allowed by the Assistant Collector. 61. So far as the prompt payment discount is concerned, it is payable under a scheme called prompt payment discount scheme which is applicable only to up-country non-RCS dealers (except, of course, the Government and DGS D accounts). The discount is @ 0.75% on the total value of the invoice including sales tax, surcharge etc. provided the bill is cleared/paid within 26 days from the date of invoice. The case of the Union of India is that this discount is limited only to certain varieties of products as explained in the scheme document and is valid only for a limited period. The Assistant Collector, however, dealt with this discount along with the year ending discount and allowed it on the same reasoning as is applicable to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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