TMI Blog2015 (8) TMI 1014X X X X Extracts X X X X X X X X Extracts X X X X ..... case may be. Judgment in the case of Super Synotex [2014 (3) TMI 42 - SUPREME COURT] was concerned with sales tax incentives that were given under the Rajasthan Sales Tax Incentives Scheme. On the facts of that case, 25% of the sales tax was paid to the Government, and 75% of the said amount of sales tax was retained by the assessee and became the assessee s profit. - Court did not deal with Section 4(1)(a) as amended in the year 2000 insofar as it speaks of delivery of goods at the time and place of removal. - This judgment does not in any manner deviate from the settled legal position so far as cash discounts are concerned as has been laid down in Union of India v. Bombay Tyre International (1983 (11) TMI 70 - SUPREME COURT OF INDIA) and Government of India v. MRF (1995 (5) TMI 28 - SUPREME COURT OF INDIA) - Decision in the case of Super Synotex distinguished. It is clear that cash discount has therefore to be taken into account in arriving at price even under Section 4 as amended in 2000. - Matter remanded back - Decided in favour of assessee. - A. K. Sikri And R. F. Nariman,JJ. For the Appellant : Mr. Rajesh Kumar, Adv. For the Respondent : Ms. Pinky A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scount for the period prior to July 2000. However, on the remaining issues, the Commissioner has confirmed duty demand of ₹ 44,66,247/- and also imposed penalty of ₹ 49,66,247/- on the appellant as follows:- ORDER With a view to the discussion and findings recorded above (i) invoke extended period of limitation provided in first proviso to Section 11A(1) of the Central Excise Act, 1944, and determine the following amounts in terms of provisions of Section 11A and direct the assessee to pay the same forthwith. (a) ₹ 13,43,046/- towards duty involved on replaced goods cleared between March 1997 to March 2001. (b) ₹ 14,27,483/- towards duty computed for the period of March 1997 to March, 2001 on volume discount. (c) Rs, 11,96,601/- towards duty computed for the period of March 97 to March, 2001 on Sales Tax deduction and (d) ₹ 4,99,117/- towards duty on cash discount for the period of July 2000 to March, 2001 (ii) confirm that the interest in terms of provisions of Section 11AB ibid is payable by the assessee on the amounts of (i) (a) to (i) (d) above; (iii) impose a penalty of ₹ 44,66,247/- on as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Bom.) has filed that the wholesale cash price on which the excisable duty is assessable will naturally be the price minus the cash discount allowed in the invoice. The Hon'ble High Court has proceeded on the basis that the sales are effected on the basis of the price basis which themselves mention the various terms subject to which the sales are effected. The Tribunal followed the said Judgment in CCE, Meerut Vs. Station Shox Ltd. 1996 (85) ELT 139 (T). The provision of Section 4 of the Central Excise Act have since then completely changed. As per new Section 4. Value shall 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 buyers of the goods are not related and the price is the sole consideration for the sale, be the transaction value. Thus in the present matter, the value for the purpose of Section 4 shall be the transaction value which has been defined in clause (d) of sub-section(3) of Section 4 of the Act as under:- ''transaction value means the price actually paid or payable for the goods, when sold, and includes in addition to amount charged as priced, any amount that they buyer i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India v. Bombay Tyre International Limited, 1984 (17) ELT 329 (SC), and Government of India v. Madras Rubber Factory Ltd., 1995 (77) ELT 433 (SC). 8. Further, according to the learned counsel, transaction value which was introduced for the first time into the amended Section 4 does not make any change with regard to the fact that such transaction value is only at the time of removal from the factory or depot, being the time of clearance of excisable goods from the factory premises or depot as the case may be. According to him, every agreement of sale entered into by the assessee with its buyers makes it known before the goods are cleared that there is to be a cash discount insofar as the appellant s goods are concerned. Therefore, this being the case, it is clear that at the time of clearance of the excisable goods from the appellant s factory, such discounted price alone has to be the value of the goods cleared from the appellant s factory even under the amended Section 4. 9. Ms. Pinky Anand, learned Additional Solicitor General, has, on the other hand, stated that the introduction of transaction value into the amended Section 4 makes a world of difference and that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject to the other provisions of this section, be deemed to be (a) the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale: Provided that - (i) where, in accordance with the normal practice of the wholesale trade in such goods, such goods are sold by the assessee at different prices to different classes of buyers (not being related persons) each such price shall, subject to the existence of the other circumstances specified in clause (a), be deemed to be the normal price of such goods in relation to each such class of buyers; (ia) where the price at which such goods are ordinarily sold by the assessee is different for different places of removal, each such price shall, subject to the existence of other circumstances specified in clause (a), be deemed to be the normal price of such goods in relation to each such place of removal; (ii) where such goods are sold by the assessee in the course of wholesale trade for deliv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of removal referred to in sub-clause (iii) of clause (b), shall be deemed to be the time at which such goods are cleared from the factory; (c) related person means a person who is so associated with the assessee that they have interest, directly or indirectly, in the business of each other and includes a holding company, a subsidiary company, a relative and a distributor of the assessee, and any sub-distributor of such distributor. Explanation. - In this clause holding company , subsidiary company and relative have the same meanings as in the Companies Act, 1956 (1 of 1956); (d) value , in relation to any excisable goods,- (i) where the goods are delivered at the time of removal in a packed condition, includes the cost of such packing except the cost of the packing which is of a durable nature and is returnable by the buyer to the assessee. Explanation. In this sub-clause, packing means the wrapper, container, bobbin, pirn, spool, reel or warp beam or any other thing in which or on which the excisable goods are wrapped, contained or wound; (ii) does not include the amount of the duty of excise, sales tax and other taxes, if any, payable o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, including the case where the goods are not sold, be the value determined in such manner as may be prescribed. (2) The provisions of this section shall not apply in respect of any excisable goods for which a tariff value has been fixed 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; (b) persons shall be deemed to be related if- (i) they are inter-connected undertakings; (ii) they are relatives; (iii) amongst them the buyer is a relative and a distributor of the assessee, or a sub-distributor of such distributor; or (iv) they are so associated that they have interest, directly or indirectly, in the business of each other. Explanation. In this clause (i) inter-connected undertakings shall have the meaning assigned to it in clause (g) of section 2 of the Monopolies and Restrictive Trade Practices Act, 1969 (64 of 1969); and (ii) relative shall have the meaning assigned to it in clause (41) of section 2 of the Companies Act, 1956 ( 1 of 1956); (c) place of removal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. Post 1973, this Court has in two of its decisions, namely, in Union of India v. Bombay Tyre International Limited, 1984 (17) ELT 329 (SC), clearly held as follows:- Trade Discounts. Discounts allowed in the Trade (by whatever name such discount is described) should be allowed to be deducted from the sale price having regard to the nature of the goods, if established under agreements or under terms of sale or by established practice, the allowance and the nature of the discount being known at or prior to the removal of the goods. Such Trade Discounts shall not be disallowed only because they are not payable at the time of each invoice or deducted from the invoice price. (at para 1) 16. In the second judgment in Government of India v. Madras Rubber Factory Ltd., 1995 (77) ELT 433 (SC), what has been held is as follows:- Year Ending Discount and Prompt Payment Discount: 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal 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 the year ending discount. 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. (at paras 59 to 62) 17. The only question that falls for our determination is whether Section 4 as amended in the year 2000 makes no change to the aforesaid position. 18. It can be seen that Section 4 as amended introduces the concept of transaction value so that on each removal of excisable goods, the transaction value of such goods becomes determinable. Whereas previously, the value of such excisable goods was the price at which such goods were ordinarily sold in the course of wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2% if payment is made at the time of delivery or within a specified period. Such cash discount will be admissible and the price will be ₹ 100 per unit minus 2%. 20. This understanding of the Board would necessarily continue in view of what is said above as regards cash discounts even after the amendment of Section 4 in the year 2000. 21. We were referred to the judgment of this Court in Deputy Commissioner of Sales Tax (Law) Board of Revenue (Taxes), Ernakulam v. Advani Oorlikon (P) Ltd., 1981 (8) ELT 801 (S.C.), in which it was stated:- Cash discount is allowed when the purchaser makes payment promptly or within the period of credit allowed. It is a discount granted in consideration of expeditious payment. A trade discount is a deduction from the catalogue price of goods allowed by wholesalers to retailers engaged in the trade. The allowance enables the retailer to sell the goods at the catalogue price and yet make a reasonable margin of profit after taking into account his business expense. The outward invoice sent by a wholesale dealer to a retailer shows the catalogue price and against that a deduction of the trade discount is shown. The net amount is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction value or value in relation to excisable goods is obvious. The price or cost paid to the manufacturer constitutes the assessable value on which excise duty is payable. It is also obvious that the excise duty payable has to be excluded while calculating transaction value for levy of excise duty. Sales tax or VAT or turnover tax is payable or paid to the State Government on the transaction, which is regarded as sale, i.e., for transfer of title in the manufactured goods. The amount paid or payable to the State Government towards sales tax, VAT, etc. is excluded because it is not an amount paid to the manufacturer towards the price, but an amount paid or payable to the State Government for the sale transaction, i.e., transfer of title from the manufacturer to a third party. Accordingly, the amount paid to the State Government is only excludible from the transaction value. What is not payable or to be paid as sales tax/VAT, should not be charged from the third party/customer, but if it charged and is not payable or paid, it is a part and should not be excluded from the transaction value. This is the position after the amendment, for as per the amended provision the words ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e other point of defective goods and volume discount on sales tax is concerned, the Tribunal has stated:- 8. We have considered the submissions of both the sides. Regarding defective goods, we observe from the statement dated 9.10.2000 of Shri R.K. Gulati that he has clearly deposed therein that the goods so received from various customers under the said D3s,have not actually been rectified and entire new finished products have been sent to the buyer taking it as the goods rectified. This is clear admission on the part of the authorized signatory for Excise matters that new excisable goods were cleared in place of defective goods received back. This statement has not been retracted by Shri Gulati at all. The certificate given by the Chartered Engineer is dated 5.7.2002 which is much after the period involved in the present matter before us and cannot overcome the clear admission by the authorized signatory of the Appellant company. We also do not find any force in the submission that Shri Gulati's statement can be relied upon only in respect of Khandsa factory not in respect of factory at Mehrauli Road since no such qualification has been attached by Shri Gulati in his s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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