9911796707
TMI Blog2014 (10) TMI 764X X X X Extracts X X X X X X X X Extracts X X X X ..... l Excise duty (inclusive of Education Cess and Higher Education Cess) of Rs. 240,57,84,802/- (Rupees Two Hundred Forty Crores Fifty Seven Lakhs Eighty Four Thousand Eight Hundred Two only) whether leviable on this count and recoverable from the appellant under Section 11A (1) of the Act invoking the proviso to Section 11A(1) for extended period. 2.1 The appellant is engaged in the manufacture and clearance of Motor Vehicles and parts thereof falling under Chapter 87 of Central Excise Tariff Act, 1985 (5 of 1986). During the course of audit it was observed that the appellant was selling the above vehicles through a network of dealers across India. The appellant was giving dealership margin to the respective dealers for the vehicles being sold by them, over and above the assessable value and taxes as declared in the invoices. In addition to this, different promotional and incentive schemes such as corporate discount, free insurance etc. for their customers were launched for the sale of its vehicles. 2.2 It was observed during adjudication that the appellant was incurring expenditure towards advertisements in different newspapers throughout India to make the customers aware of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsumer offer has been shared by the appellant and dealers. Appellants contribution to consumer offer has been provided to dealers on invoices as spot discount. Dealers contribution to consumer offer is met from their margin, i.e. they have reduced margin. (iii) Loyalty or exchange bonus scheme This is also a discount which is offered to those persons who have purchased a Maruti vehicle in past and now again make a repeat purchase of Maruti vehicle. In case he sells his existing car to dealer, then discount is called 'exchange bonus' otherwise 'loyalty bonus'. Sometime in 'exchange scheme' non-Maruti old vehicles are also covered so as to boost sale of new cars. The loyalty or exchange bonus cost is shared by the appellant and dealers as per the scheme announced. The appellant credits this amount to dealers account on the basis of advice received from its Zonal Office after verification of reimbursement claims lodged by dealers. 4. In the adjudication proceedings, the adjudicating authority held that the discounts borne by the dealers was a flow of consideration to the appellants by reason of, or in connection with the sale of vehicles and accordingly the amount of discount bor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 010 (257) ELT 226 (Tri.- LB) and has contended that the ratio of the judgment squarely applies to the facts and circumstances of the appeals under consideration. D.R. informed that Revenue is in appeal against Tata Motor Judgement of Bombay High Court before the Apex Court. 6.2 Revenue relied on Para 137.2 of the impugned order to submit that the promotional discount scheme was within the knowledge of appellant and no dealer shall ordinarily bear discount to reduce his sales consideration and margin without that being compensated by manufacturer appellant. Further the representatives of M/s Maruti Suzuki explained in Para 137.2 and 137.3 of impugned order as to the scheme and how promotional advertisements were given by M/s Maruti Suzuki at its cost and all schemes operated with the approval of M/s Maruti Suzuki and part of consumer offer ranging from 60% to 65% was borne by appellant. 7. Heard both sides and also gone through the records. 8.1 The issue involved is whether part of the promotional discount paid from the dealer;s margin is includible in the assessable value for the purpose of payment of central excise duty or not? 8.2 To understand the implications of discounts b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l but is expanded to include any indirect benefit received in the course of or on account of sale in view of the meaning of transaction value as incorporated in to the provisions of Section 4(3)(d) of the Act w.e.f. 1-7-2000. 8.5 Further, definition clause of the expression 'transaction value', refers to 'any amount that buyer is liable to pay'. Only restriction that has been imposed is that such payment should be 'by reason of or in connection with the sale' of such goods. Thus reason of sale and inter connection thereto are essential elements to contribute for assessable value. 8.6 Prima facie, it is noted that the promotional discount was given under the understanding between the manufacturer and the dealer in relation to the activity of sale as an expenditure on behalf of the appellant by the dealer, and that is regulated through dealer's margin. That would form part of the assessable value of such goods. Undoubtedly, such discounts borne by the dealers could also be to the advantage of the dealers in the form of increased sale leading to earning of increased profit. Commission However, in relation to the manufacturer, it would be an indirect consideration received by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facie, it appears that the dealers have not borne their share of discount on their own accord but because of the fact that they are bound by the meticulously designed Dealership Agreement which they are bound to accept in their business interest. It would be commercially unthinkable for any dealer to remain in business without offering promotional discounts on 'Ex-showroom Price', while charging over and above that price in the name of 'Handling Charges' or by some other name. Therefore, prima facie it transpires that the discounts have been offered in connection with the sale and such discounts were a booster to the appellant to increase the sales. Further, such discounts has character of expenses on account of Advertising or Publicity, Marketing and Selling Organization Expenses, which are covered within the definition of 'transaction value' as provided under Section 4(3)(d) of CEA, 1944. 8.11 The Honble Supreme Court has held that whenever there is a legally enforceable right available to the assessee against his customer in relation to the sale, then value thereof must be included. A large number of Supreme Court decisions also support Revenues contention that when manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement expenditure incurred by a manufacturer's customer can be added to sale price for determining assessable value only if manufacturer has an enforceable legal right against the customer to insist on incurring of such advertisement expenses by customer. 9. Appellant raised an issue on limitation on the premise that whenever any promotional scheme was launched by them, such facts were in the knowledge of the department. The learned DR placed on record documents evidencing the fact that the dealers were charging from the ultimate buyers a price over and above the ex-showroom price in the name of handling charges. Such fact was admitted before the adjudicating authority. They were recovering charges over and above the ex-showroom price and appellant has no control over the dealers in this regard. The learned DR contended that the appellant was conscious about recovering of such extra charges so as to compensate the portion of discount borne by them. As the term suggests, 'ex-showroom' meant price which was to be charged when the vehicle was taken out of the show room. Naturally, the handling charges recovered by the dealers were incurred before the vehicle was delivered 'ex-showr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
