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Commissioner of Central Excise And Service Tax, Indore Versus M/s. Bridgestone India Pvt. Ltd.

2015 (9) TMI 981 - CESTAT NEW DELHI

Denial of refund claim - Determination of assessable value - Inclusion of discounts given - Unjust enrichment - Held that:- discount policy of the assessee is known prior to the clearance as the rate of discount is mentioned in the assessee s agreements with their dealers and also from the circulars, it is clear that the deduction of quantity discount cannot be disallowed. - there is nothing in the agreements from which it can be inferred that the quantity discounts being given by the assessee t .....

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ued by the assessees to his dealers, the invoice price mentioned in the invoices issued earlier would stand reduced to that extent and in such a situation, the burden of proof would shift to the Department and it would be for the Department to establish that the credit notes issued are bogus. In the present case, there is no such evidence produced by the Department. In view of this, following the judgement of the Hon'ble Rajasthan High Court in the case of A.K. Spintex Ltd. (2008 (11) TMI 89 - R .....

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umar, Member (T) And Sulekha Beevi, Member (J), JJ. For the Appellant : Shri R K Gupta, DR For the Respondent : Shri Tarun Gulati, DR ORDER Per Rakesh Kumar: The facts leading to filing of these appeals, one by M/s.Bridgestone India Pvt. Ltd. (hereinafter referred to as assessee ) and the other filed by the Revenue are, in brief, as under:- 1.1 The assessees are manufacturers of tyres chargeable to central excise duty. The period of dispute in this case is from October, 2011 to December, 2012. D .....

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of this, the assessee, during the period of dispute, paid duty on the value without deducting the discounts, as the same depending upon the volume of purchase made by the dealers in a month was not known at the time of clearance. Subsequently when the appellant were able to quantify the cash discounts and quantity discounts they filed the refund claim of ₹ 89,40,810/- for the period October, 2011 to December, 2011, refund claim of ₹ 86,01,272/- for the period from Jan. 2012 to March, .....

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eductible. 1.2 On appeal being filed to the Commissioner (Appeals) against this order, the Commissioner (Appeals) vide order-in-original dated 17.07.2014 while allowing deduction of cash discounts ordered for refund of the excess duty paid holding that there is no unjust enrichment. However, he disallowed the deduction of quantity discount/turnover discounts. While the Revenue is in appeal against the part of the Commissioner (Appeals) s order ordering refund by holding that there is no unjust e .....

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ith their dealers, the same is linked to the dealers buying certain minimum quantity during the month, that there is no linkage between the quantity discount available to a dealer and that dealer having to provide certain facilities and infrastructure at his showroom, that there is nothing in the assessee s agreement with their dealers/C&F Agents from which it can be inferred that the quantity discount was subject to the condition of making certain minimum investment on providing certain inf .....

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5 (77) ELT 433 (SC) has held that the deduction of discount based on turnover which is determined at the end of the year is permissible, even though it is passed on subsequent to the clearance, as the same is known prior to the clearance, that the same view has been taken by the Tribunal in the case of Wearwell Tyres & Tubes Indus P. Ltd. Vs. CCE reported in 2010 (257) ELT 126 (Tribunal-Delhi), that the Tribunal in the case of Kesoram Rayon Vs. CCE reported in 2010 (136) ELT 382 (Tribunal-Ko .....

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discount provided to bulk buyers is admissible for deduction, that in view of this, disallowing the deduction of quantity/turnover discounts is not correct, that though the assessee offers the quantity/turnover discounts at different rates to different types of dealers depending upon their infrastructure facilities which in terms of the Apex Court s judgment in the case of Metal Box India Ltd.(supra), the assesse are free to do so, that the same view has been taken by the Tribunal in the case o .....

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mentioned in the assessee s agreement with dealers which have also been placed on record. As regards the question of unjust enrichment in this case, he pleaded that since the discounts had been passed on by the issue of credit notes to the dealers and those credit notes have not been challenged by the Department, the assesee cannot be said to have passed on to their customers, the burden of excess duty paid by them and whose refunds have been claimed and in this regard he relies on the judgemen .....

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the department to prove that the credit notes are not genuine, that the same view has been taken by the Karnataka High Court in the case of Sudhir Papers Ltd. Vs. CCE, Bangalore reported in 2012 (276) ELT 304 (Kar.), that the ratio of the judgements of the Hon ble Rajasthan High Court and Karnataka High Court is squarely applicable to the facts of this case and in view of this, the order of the Commissioner (Appeals) that there is no unjust enrichment is correct. 4. Shri R.K. Gupta, ld. Departm .....

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n maintaining the certain infrastructure facilities and services at the showrooms in terms of the agreement and, therefore, deduction of this discount is not admissible. 5. We have considered the submissions from both the sides and perused the records. 6. There are two issues involves in this case. The first point of issue is as to whether the quantity/turnover discount being given by the assessee to their dealers and which depends upon the dealers buying minimum certain quantity in a month and .....

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ere is no dispute that this discount is linked to the quantum of goods purchased by the dealers in a month and the rate of quantity discount varies from dealer to dealer depending upon the dealers obligations to provide certain infrastructure and facilities at the showrooms. The dealers with better infrastructure and service facilities at their showrooms are offered higher discounts. In our view, in accordance with the judgement of the Apex Court in the case of Bombay Tyre International reported .....

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, discount of any type or description given on any normal price payable for any transaction will not form part of the transaction value for the goods e.g. quantity discount for goods purchased or cash discount for the prompt payment etc. will therefore not form part of the transaction value and 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 cons .....

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wever, according to the department, the quantity discount being extended by the assessee is a sort of reimbursement to the dealers for maintaining certain infrastructure and service facilities at the showrooms like Air Conditioned Customer waiting space, adequate space for reception, separate space for washroom for customers, computer based accounting software, parking facility for customers vehicles, tyre changer, tyre balancing machine, Nitrogen inflation, tyre alignment machine, rim straighte .....

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