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2015 (7) TMI 343 - CALCUTTA HIGH COURT

2015 (7) TMI 343 - CALCUTTA HIGH COURT - 2015 (323) E.L.T. 508 (Cal.) - Provisional assessment - applications of the petitioner company have not been responded to by the respondent (revenue) - As a result, the petitioner company is being forced to clear the goods manufactured by it on final assessment basis without taking into account the trade discounts made available by it to its customers, thereby ending up paying excess central excise duty than what is actually payable under the 1944 Act. - .....

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e and Customs circular dated 30th June, 2000, discount of any type made known prior to the clearance of the goods but quantified subsequently and passed on to the customers is an admissible deduction from the transaction value and as such the assessment for such transactions may be made on a provisional basis. - no legitimate ground exists for the department to disallow the petitioner company to pay excise duty on provisional basis on the concerned goods as per Rule 7 of the Central Excise Rules .....

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Arijit Banerjee, J. (1) In this writ petition, the petitioner prays for a direction in the nature of mandamus directing the respondents to allow clearance of excisable goods manufactured/to be manufactured by the petitioners under provisional assessment in terms of Rule 7 of the Central Excise Rules, 2002. The facts of the case, in brief are as follows. (2) The petitioner company is engaged in the business of manufacture and sale of, inter alia, MS Billets and TMT Bars. The TMT Bars cleared from .....

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by way of claims notified and published from time to time, quantification thereof is possible only at the end of the notified period. The dealers fulfilling the qualification conditions become eligible to get duty discount at the end of the notified period, processed by way of credit notes. (3) Central excise duty is leviable on the goods manufactured and cleared by the petitioner company in terms of the provisions of Section 3 of the Central Excise Act, 1944 read with the Central Excise Tariff .....

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(a) in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, be the transaction value; (b) in any other case, including the case where the goods are not sold, be the value determined in such manner as may be prescribed. Explanation - For the removal of doubts, it is hereby declared that the price-cum-duty of the excisable goods sold by the a .....

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d under sub Section (2) of Section 3. (3) For the purpose of this section ( a) assessee means the person who is liable to pay the duty of excise under this Act and includes his agent; ……………………………………………………………………………………. (d) transaction value means the price actually paid or pay .....

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tter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods. (4) The petitioners submit that in terms of Section 4 (1)(a) of the 1944 Act value of excisable goods for the purpose of charging excise duty thereon is the transaction value as defined in Section 4(3)(d) of the Act. Transaction value is defined to mean the price actually paid or payable for the goods when sold and additional consideration which the buyer i .....

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e nature of the trade discounts, it is not possible to arrive at the price actually paid or payable for the goods being sold by the company. Since the quantity/turn over discounts are based on achievement of the target and are allowed on varying rates depending upon the slab which a particular dealer attains in terms of the relevant scheme, it is not possible to quantify the discount at the time of clearance of a particular consignment from the factory. Hence, the petitioner company being unable .....

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t 1, 2013 to November 30, 2013. By a letter dated October 29, 2013 the respondent no. 1 rejected the said application of the company. Being aggrieved, the company preferred an appeal before the Commissioner of Central Excise, Calcutta, who by a letter dated May 21, 2014 allowed the appeal holding that there are sufficient reasons for extending the facility of provisional assessment of duty under Rule 7 of the said 2002 Rules. The respondent no. 1 has preferred an appeal before the Customs, Excis .....

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itioner company by its letter dated December 2, 2014 for the period of December 1, 2014 to March 31, 2015. These applications of the petitioner company have not been responded to by the respondent no. 1. As a result, the petitioner company is being forced to clear the goods manufactured by it on final assessment basis without taking into account the trade discounts made available by it to its customers, thereby ending up paying excess central excise duty than what is actually payable under the 1 .....

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he subject excisable goods are manufactured from the factory since the quantum of discounts is known only at the end of the achievement of the target by the respective customers and because of their varying rates depending upon the slab which a particular dealer achieves in terms of the scheme under which such discounts are provided. It is, therefore, impossible for the company to determine the correct transaction value of excisable goods on which central excise duty is payable at the time of re .....

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he petitioner company on provisional basis in terms of Rule 7 of the said Rules. (9) Ld. Counsel relied on a circular dated 30th June, 2000 issued by the Central Board of Excise and Customs, Ministry of Finance, Department of Revenue wherein at paragraph 9 it is stated as follows:- 9. As regards discounts, the definition of transaction value does not make any direct reference. In fact, it is not needed by virtue of the fact that the duty is chargeable on the net price paid or payable. Thus if in .....

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m part of the transaction value. What is important is that it must be established that the discount for a given transaction has actually been passed on to the buyer of the goods. The differential discounts extended as per commercial considerations on different transactions to unrelated buyers if extended cannot be objected to and different actual prices paid or payable for various transactions are to be accepted for working out assessable value. Where assessee claims that the discount of any des .....

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2007 (209) ELT 5 wherein the Hon ble Supreme Court after referring to several of its earlier decisions, reiterated that circulars issued under Section 119 of the Income Tax Act, 1961 and Section 37B of the Central Excise Act, 1944 are binding on the revenue. In that case, the Hon ble Supreme Court referred to its earlier decision in the case of Commissioner of Customs, Calcutta-vs.-Indian Oil Corporation Ltd. reported in (2004) 3 SCC 488 wherein the Hon ble Apex Court held as follows:- (1) Alth .....

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d demand contrary to the existing circulars of the Board are ab initio bad. (4) It is not open to the Revenue to advance an argument or file an appeal contrary to the circulars. (11) Ld. Counsel for the petitioners then relied on a judgment of this Court in the case of Commissioner of Central Excise, Calcutta-vs.-Black Diamond Beverage Ltd. reported in 2014 (307) ELT 679 wherein this court also observed that a circular issued by the Board binds the revenue and they cannot take a stand that the c .....

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in the case of Pankaj Guljarilal Gupta-vs.-Collector of Customs, Calcutta reported in 1995 (75) ELT 47 wherein this Court, in the context of the Central Excise Act, 1944, held that mere filing of an appeal against the order of the lower forum does not automatically mean stay of operation of the order of the lower forum. The department is bound to comply with the order of the lower forum unless operation thereof is stayed by the appellate forum. He submitted that there is no stay of operation of .....

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this court one year after the department filed appeal against the order of the Commissioner and, such delay disentitles the writ petitioners to any relief. Ld. Counsel finally submitted that if the writ application is allowed, the department s appeal against the Commissioner s order permitting clearance of goods on the basis of provisional assessment, would be rendered infructuous. (15) Ld. Counsel for the respondents relied on a decision of the Hon ble Supreme Court in the case of Commissioner .....

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y excisable goods. Ld. Counsel also refereed to a decision of Madras High Court in the case of Shree Ganesh Steel Rolling Mills Ltd.-vs.- Asstt. Commissioner of Customs, Chennai reported in 2006 (206) ELT 76 wherein at paragraph 28 of the judgment it was observed that Section 18 (1) of the Customs Act does not make it mandatory on the customs officer to make a provisional assessment. The use of the word may in Section 18 (1) indicates that it is the discretion of the customs officer to make a pr .....

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able to determine the value of excisable goods or determine the rate of duty applicable thereto, he may request the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, in writing giving reasons for payment of duty on provisional basis and the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, may order allowing payment of duty on provisional basis at such rate or on such value as may be .....

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said Rule the Assistant Commissioner or the Deputy Commissioner is empowered to order payment of duty on provisional basis where the assessee is unable to determine the value of excisable goods or determine the rate of duty applicable thereto and the assessee makes a request for payment duty on provisional basis giving reasons therefor. This is subject to the assessee executing a bond binding him to pay the difference between the amount of duty as may be finally assessed and the amount of duty .....

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ing upon the slab which a particular dealer attains in terms of the relevant scheme, it is not possible to quantify the discount at the time of clearance of a particular consignment from the factory or the place of removal. Consequently, the petitioner company is unable to determine the correct transaction value of the concerned excisable goods at the time of and place of removal thereof which in turn makes it impossible to assess actual excisable duty payable. Hence, it appears to be a fit case .....

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This can be done only at a later stage, precisely at the end of discount scheme period offered to the dealers which is usually after four months. As per paragraph 9 of the Central Board of Excise and Customs circular dated 30th June, 2000 referred to above, discount of any type made known prior to the clearance of the goods but quantified subsequently and passed on to the customers is an admissible deduction from the transaction value and as such the assessment for such transactions may be made .....

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f removal of the goods from the factory. Denying such permission to the petitioner company would result in forcing the petitioner company to pay more excise duty than it is actually liable to pay. In fact, as submitted by Ld. Counsel for the petitioners, for the period August 1, 2013 to November 30, 2013, the petitioner company was compelled to obtain clearance of the goods upon paying excise duty on the basis of full value of the goods without taking into account the trade discounts extended by .....

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ority to exercise such power in fit and appropriate cases. Refusal to exercise such power in a situation which warrants exercise of the power, would amount to an act of unreasonableness and arbitrariness on the part of the authority and such act/ommission is not legally sustainable. If the Court finds that an authority has arbitrarily or unreasonably refused to exercise the power which is causing undue prejudice to a party, the courts must interfere and direct the authority to exercise such powe .....

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