TMI Blog2016 (4) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... stomer from Depot” and “Declared Price of Goods in the factory at which duty paid at the time clearance /Sale Price (S.P.)”. It is observed that S.P. is inclusive of duty. The appellant in their reply to show cause notice categorically stated that the duty element is required to be excluded in the invoice value of the depot. The appellant also submitted some of the copies of invoices to show that the price it depot is cum-duty price. It is noticed that as per Section 4 (3) (d) of the Act, 1944, value in relation to any excisable goods does not include excise duty, sales tax etc., Hence, the findings of the Adjudicating Authority that the factory price is inclusive of duty cannot be sustained. Denial of benefit of cash discounts from assessable value - Held that:- It is not in dispute that the duty has been demanded in respect of cash discount, which was not actually passed on to the customer. The Hon’ble Supreme Court in the case of Purolator India Ltd [2015 (8) TMI 1014 - SUPREME COURT ] set aside demand of duty on cash discount issue. The Hon’ble Supreme Court allowed cash discount even after introduction of Transaction Value for the reason the cash discount for prompt paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty, as they failed to declare the correct assessable value by claiming the excess deduction of freight and forwarding i.e. transportation charges and also failed to determine and discharge the correct Central Excise duty leviable on their product considering the value/prices collected from their depots. By the impugned order, the Adjudicating authority confirmed the demand of differential Central Excise duty of ₹ 51,61,530.00 alongwith interest, after allowing the benefit of cum-duty price , and also imposed penalty of equal amount of duty under Section 11AC of the Act, 1944. It has dropped demand of duty of ₹ 9,34,690.00 involved on excess transportation charges. It has further imposed penalty on various persons as under:- i) Shri Hasmukhbhai Nagjibhai Desai, Senior Executive-cum-Authorised Signatory of the Assessee Company. Rs.2 lakhs ii) Shri Kanubhai Mohanlal Desai, General Manager (Admn) of the Assessee Company Rs.2 lakhs iii) Shri Arun C. Ashar, Acting Director of the Assessee Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submits that the Assessee had not produced any evidence that they have passed the discount to the customers. So, they are not entitled for abatement on cash discounts as claimed by them. Hence, the appeals filed by the Assessee and the others are liable to be rejected. Regarding the appeal filed by the Revenue, it is submitted that there is no provision to extend the cum-duty benefit. It is further submitted that the Assessee claimed the excess transportation charges over and above the actual cost of transportation charges, which is contrary to the Valuation Rules. As per Section 4 of the Central Excise Act read with the Central Excise Valuation Rules, the cost of transportation from the place of removal to the place of delivery shall be excluded from such price, which would be the actual cost of transportation. So, the Adjudicating authority erroneously dropped the demand of duty on excess transportation charges. 6. Heard both sides and perused the records. 7. The main issue involves in the appeal of the assessee, under-valuation of the goods during the period from Sept. 1995 to March 1999. The Adjudicating Authority bifurcated the demand of duty into two spells i.e., from S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee means the person who is liable to pay the duty of excise under this Act and includes his agent; (b) 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 of duty; (iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after the clearance from the factory and, from where such goods are removed. 8. It may be noted that prior and after amendment as on 28.09.1996, as per Section 4(1)(a), the normal price would be the price at which the excisable goods are ordinarily sold by the assessee to a buyer for delivery at the time and place of removal . In other words, the normal price would ordinarily be determined the price at which goods are sold at the time of delivery and place of removal. The expressions the price at which such goods are ordinarily sold by the assessee , if read with for delivery at the time and place of removal in section 4(1) (a) make it clear that the value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.1983 but subsequent thereto on account of consumer resistance, the Ministry of Commerce, Govt. of India, directed them, pursuant to the decision taken at the meeting with the tyre manufacturers roll back to pre 14.5.1983 level and it is on account of this roll back of price, they claimed refund of duty of differential amount. The Tribunal rejected the refund claim and came to the conclusion that under Rule 9A and Rule 173C(2)(vi) of the Central Excise Rules 1944, the duty was chargeable on the excisable goods at the rate and on the price prevailing of the date of actual removal as shown by the assessee from the factory and the subsequent reduction in the price even at the behest of Govt. could not create a right in favour of the assessee to refund of Excise duty on the differential amount in the price. Subsequent reduction in the price is totally irrelevant, so far as the liability to pay Excise duty. The Honble Supreme Court held as under: We have heard the learned counsel for the assessee. Once the assessee has cleared the goods on the classification and price indicated by him at the time of the removal of the goods from the factory gate, the assessee becomes liable to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g at the depot on the date of clearance. The goods were ultimately sold at the depot at the same, higher or lower price. The Adjudicating Authority confirmed the demand of duty on the value at which goods were sold at the depot. The Tribunal held that the value of the goods would be assessed at the price prevalent on the date of removal of goods from the factory. The relevant portion of the said decision is reproduced below: When goods are removed from the factory to the depot and sales were effected at the depot, how duty is to be calculated is not an issue res Integra. It is covered by Circular dated 14-10-96 issued by CBEC also. Adjudicating authority, in his order, observed I therefore, cannot persuade myself to agree with the assessee's contention that CBEC Circular date 14-10-1996 is applicable in their case . From this, it appears, he is not happy with the provision contained in the Circular and he wants to take a view contrary to the provisions contained in it. The provision contained in the Circular is in conformity with the law stated by this Tribunal in Castrol India Ltd. v. Commissioner of Central Excise, New Delhi [2000 (118) E.L.T. 35 Tribunal]. Referring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue of the goods cleared from Bombay on 1st January. If this consignment cleared on 1st January is sold, say on the 1st March from Ahmedabad Depot at a lower or higher price, such a price will be the basis for valuation of clearances on 1st March and so on. This will apply mutatis mutandis to cases of provisional assessments also where at the time of clearance on 1st January the sale price from the depot on 1st January is not known. 9. It is clear from the above that where no ex-factory price is available and the entire goods sold through depots, the assessable value has to be determined on the price prevalent at the depot at the time of removal of goods from the factory before and after amendment as on 18.9.1996. In the present case, the Adjudicating Authority in respect of demand of duty prior to 18.9.1996 observed that the appellant was required to sell their goods from their depots at the rate declared as Sale Price at Depot are as Rs. per unit. It is also observed that in certain cases, their depots has sold their products at higher rate than Sale Price declared in their declaration, which resulted in undervaluation and thereby short payment of Central Excise duty. They ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluded in the invoice value of the depot. The appellant also submitted some of the copies of invoices to show that the price it depot is cum-duty price. It is noticed that as per Section 4 (3) (d) of the Act, 1944, value in relation to any excisable goods does not include excise duty, sales tax etc., Hence, the findings of the Adjudicating Authority that the factory price is inclusive of duty cannot be sustained. 13. The next issue is that the denial of benefit of cash discounts from assessable value.The Adjudicating authority observed that the nature of discount appears to be conditional and not uniformly given to all customers. The Assessee had also failed to produce any evidence to establish that they have passed on the said discount to the customers. Therefore, they are not entitled for abatement of cash discount. It is submitted by the learned Advocate that varying rate of discount offered by the Assessee depending upon the utilisation of free credit period. The Hon'ble Supreme Court in the case of Metal Box India Ltd Vs Collr. of C.E. Madras - 1995 (75) ELT 449 (SC), held that even cash discount is not uniformly given or is given at the different rates, to different pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue so long as the lack of uniformity is not founded on any extra-commercial considerations. To ignore the deduction of trade discount would amount to adding a non-existent fraction to the manufacturing profit which will artificially inflate the net assessable value for the levy of excise duty which is not legally permissible having regard to the basic concept of excise levy. We concur with the aforesaid view on the scope and ambit of trade discount envisaged for Section 4. In view of the aforesaid discussion, it must be held that the Tribunal was in error in taking the view that as trade discount was uniformly not given to all its customers by the assessee, it was not a permissible deduction and it had to be reloaded in the price of the excisable goods. We, therefore, accept the last contention. In the result these appeals are partly allowed, the order of the Tribunal will stand confirmed insofar as period of limitation applicable herein and reloading of the purchase price by the notional value of interest on advances made by wholesale buyer Ponds (I) Limited to the assessee is concerned and to that extent Assistant Collectors order will stand untouched. However, to the extent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mes clear, what the learned counsel for the assessee has argued must necessarily be accepted inasmuch as cash discount is something which is known at or prior to 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. The Hon ble Supreme Court allowed cash discount even after introduction of Transaction Value for the reason the cash discount for prompt payment as agreed by the buyer at the time of clearance of goods is a contractual price and it would be deducted from the sale price. It may be noted that the present case is prior to July 2000 and therefore, the appellant is eligible for deduction of cash discount from the assessable value. The Ld. Advocate also relied upon the following decisions: i) Bhartia Cutler Hammer Ltd Vs Collector-1988 (24) ELT 373 (Tribunal) approved by HSC 2000 (119) ELT A 175 (SC) ii) Pedder and Pedder Tiles Ltd Vs Commissioner-2000 (120) ELT 751 (Tribunal) iii) Jenson Nicholson (India) Ltd Vs UoI-1984 (17) ELT 4 (Bom.) iv) Alembic Ltd Vs CCE Vadodara-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on charges the difference was appropriated by the appellant and, therefore, the same would be a part of the assessable value. In our opinion, the Tribunal proceeded on an incorrect premise. It was clearly held in Indian Oxygen Ltd. v. Collector of Central Excise - 1988 (36) E.L.T. 723 (S.C.) = 1988 (Supp.) SCC 658, that the duty of excise is a tax on the manufacturer and not a tax on the profits made by a dealer on transportation. In view of that decision, the view taken by the Tribunal cannot be sustained. 16. We find that the Hon'ble Supreme Court and the Tribunal passed various decisions following the decision of Hon'ble Supreme Court in the case of Baroda Electric Meters Ltd (supra) as under: i) Farm Fresh Foods (P) Ltd Vs Collector-1999 (113) ELT 441 (Tribunal) ii) Nalco Chemicals India Ltd Vs CCE Calcutta-II-1998 (104) ELT 730 (Tribunal) iii) Prabhat Zarda Factory Ltd Vs Commissioner-2002 (146) ELT 497 (S.C.) iv) Escorts JCB Ltd Vs Commissioner-2002 (146) ELT 31 (S.C.) v) Bathinda Industrial Gases Vs CCE ST Chadigarh-II-2014 (308) ELT 111 (Tri-Del.) 17. So, we do not find any merit in the appeal filed by the Revenue. The learned Advo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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