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2016 (2) TMI 67 - CESTAT MUMBAI

2016 (2) TMI 67 - CESTAT MUMBAI - TMI - Refund - valuation - quantity discount given after clearance of goods from factory to their depot - Rule 7 - appellant argues that assessable value in such circumstances should be the assessable value arrived at when goods were sold from the depot to the independent customer i.e. the price after allowing the quantity discount. - Held that:- The price at which the goods are cleared from the factory to the depot does not become the assessable value for t .....

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be allowed, even if Central Excise invoices issued at the time of clearance of the goods from the factory do not mention the quantity discount, as the same can be mentioned only when the goods are sold from the depot. - Appeal is allowed with consequential benefit subject to necessary safeguards. - Decided in favor of assessee. - Appeal No. E/2360/05 - A/85426/16/EB - Dated:- 12-1-2016 - SHRI RAMESH NAIR, MEMBER (JUDICIAL) AND SHRI RAJU, MEMBER (TECHNICAL) For the Petitioner : Shri Rajesh Os .....

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fund claim seeking refund on the ground that the assessable value for the purpose of assessment should be the value arrived at after giving the quantity discount and not the value at which the goods wee cleared from factory to depot. The refund claim was rejected by the lower authorities relying on the decision of Hon'ble Supreme Court in case of MRF Ltd. - 1997 (92) ELT 309 (SC) and on the decision of the Tribunal in the case of Camphor & Allied Products Vs. Commissioner of Central Exci .....

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oods are not sold by the assessee at the time and place of removal but are transferred to a depot, premises of a consignment agent or any other place or premises (hereinafter referred to as "such other place") from where the excisable goods are to be sold after their clearance from the place of removal and where the assessee and the buyer of the said goods are not related and the price is the sole consideration for the sale, the value shall be the normal transaction value of such goods .....

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-III - 2015 (323) ELT 227 (SC). He specially highlighted paras 14 and 18 of the said decision, which read as under: - 14. It can be seen that the common thread running through Section 4, whether it is prior to 1973, after the amendment in 1973, or after the amendment of 2000, is that excisable goods have to have a determination of price only at the time of removal. This basic feature of Section 4 has never changed even after two amendments. The place of removal has been amended from time t .....

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e for delivery at a place other than the place of removal, the cost of transportation from the place of removal to the place of delivery is to be excluded from such price. This is because the value of excisable goods under the Section is to be determined only at the time and place of removal. Even after the amendment of Section 4 in 2000, the same scheme continues. Only, Section 4(2) is in terms replaced by Rule 5 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, .....

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expression for delivery at the time and place of removal It is clear, therefore, that what is paramount is that the value of the excisable goods even on the basis of transaction value has only to be at the time of removal, that is, the time of clearance of the goods from the appellant s factory or depot as the case may be. The expression actually paid or payable for the goods, when sold only means that whatever is agreed to as the price for the goods forms the basis of value, whether such price .....

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the clearance of the goods, being contained in the agreement of sale between the assessee and its buyers, and must therefore be deducted from the sale price in order to arrive at the value of excisable goods at the time of removal . 4. We have considered the rival submissions. We find that whereas the clearances from the factory gate are governed by Section 4 of the Central Excise Act, 1944, the clearance from depot are governed by the Rule 4 of Central Excise Valuation (Determination of Price o .....

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hen the transaction value at such depot will become assessable value. This is consistent with the definition of Place of removal prescribed under Section 4(3)(c) of the Central Excise Act, 1944. The said definition reads as under: - (c) "place of removal" means - (i) a factory or any other place or premises of production or manufacture of the excisable goods; (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without payment .....

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re cleared from the factory premises and not from the depot and, therefore, the facts are substantially different. The decision of Tribunal in the case of Camphor & Allied Products (supra), pertains to the period prior to the introduction of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. Revenue has also relied on the decision of Hon'ble Supreme Court in the case of Purolator India Ltd. (supra), wherein Hon'ble Supreme Court has observed as follows: .....

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ssion for delivery at the time and place of removal . It is clear, therefore, that what is paramount is that the value of the excisable goods even on the basis of transaction value has only to be at the time of removal, that is, the time of clearance of the goods from the appellant s factory or depot as the case may be. The expression actually paid or payable for the goods, when sold only means that whatever is agreed to as the price for the goods forms the basis of value, whether such price has .....

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clearance of the goods, being contained in the agreement of sale between the assessee and its buyers, and must therefore be deducted from the sale price in order to arrive at the value of excisable goods at the time of removal . It is clear from the observation of the Hon'ble Supreme Court that the transaction value is defined under sub-clause (3)(d) of Section 4 is to be read at the time of delivery for clearance of the goods at the place of removal. Time of removal has been described as th .....

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tity discount schemes and as per these quantity discount schemes, on buying certain quantity of goods, certain quantity of goods was offered free or in other words price charged was for quantity lesser than the quantity actually supplied, which has the effect of reducing the net sale price. The main contention of the department is that the deduction of quantity discount cannot be allowed, as the same, was not mentioned in the Central Excise invoices issued at the time of clearance from the facto .....

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to 1-7-2000 and in which there was a specific provision for deduction of trade discounts from the assessable value, has held that the deduction of trade discounts known and understood at the time of removal of goods is permissible, even if the same are quantified later and in para 58 and 60 of the judgment with regard to turnover discount has held that though the turnover discount is determined on half yearly basis depending upon the volume of purchases made by the dealers, its deductions is per .....

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ry (supra) would be applicable. The same view with regard to turnover discount has been taken over by this Tribunal relying upon the above mentioned judgment of the Hon ble Supreme Court in the case of Commissioner of Central Excise v. Goetze (India) Ltd. (supra). In view of this, if in this case during the period of dispute there were quantity discount schemes and the quantity discounts in the form of free quantity were given at the time of sale from depot, the same would have to be allowed, ev .....

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