TMI Blog2016 (4) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... he same. Therefore, when no duty was paid, initially in view of the provisional assessment, the question of issuing credit notes, including the duty amount on such charges, never arose. The Commissioner (Appeals) has not applied the facts of the case to the issue in question. Proper finalization of provisional assessment based upon proper computation of assessable value, taking into account the abatement claimed and the short levy/excess levy involved - Held that:- We find that though this plea has been raised in the Grounds of Appeal, there has been no findings either in the impugned Order in Appeal or in the Order in Original. While finalizing the assessment, the impugned orders do not arrive at the value of each Motorcycle/Moped after taking into account all the abatements allowed/disallowed and arriving at assessable value from cum-duty value. Abatements are applicable for all vehicles cleared and each exclusion or inclusion is applicable for every motor cycle, scooter, moped cleared and the original authority should have determined the assessable value by first deducting the abatement element and thereafter arriving at assessable value for calculating the differential duty/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , AC (AR) ORDER PER P.K. CHOUDHARY The appeals filed by the assessee and Revenue are taken up together as the issue involved are identical and arising out of common Order-in-Appeal dated 15.5.2009. 2. The brief facts of the case are that the assessees are manufacturers of motor vehicles and mopeds falling under Chapter 87 of CETA, 1985 and they are registered with Central Excise Department and discharged duty for the clearance. The assessee requested for provisional assessment on the final products cleared as they intend to claim certain abatements from the price quoted in the invoice like freight, discounts, turn over tax, tax paid under section 3(4) of TNGST Act and cash discounts and trade discounts and Pre Delivery Inspection (PDI) and Free Service Coupon (FSC). Accordingly, provisional assessment was ordered for financial years 1999 to 2004 05. The adjudicating authority finalized the provisional assessment with the respective Order-in-Original for the respective financial years and consequently demanded differential duty and also ordered for refund for the excess payment which is as under:- S. No. Appeal No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(4) Tax Disallowed Disallowed Allowed Allowed 4. Cash Discount Allowed Disallowed -- Disallowed 5. Trade Discount Disallowed Disallowed Allowed Allowed 6. FSC Allowed Disallowed -- Disallowed 7. PDI Allowed Disallowed -- Disallowed 4. Against the said Order-in-Appeals, the assesses filed appeals on four issues before this Tribunal wherein the Commissioner (Appeals) has disallowed the deductions partly on equalized freight, cash discount, FSI and PDI and also on the manner of quantification of finalization of provisional assessment whereas Revenue reviewed the said order-in-appeal and preferred appeals on that portion of the order where the Commissioner (Appeals) has allowed relief in respect of two issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmits that the only condition is that seller and buyer should know in advance about the discount. He submits that the practice is followed by the automobile industry throughout the country. He relied on the following case laws:- 1. M/s. Purolator India Ltd. Vs. CCE, Delhi-III - 2015-TIOL-193-SC-CX. 2. Konkan Synthetic Fibres Processed Yarn Vs. CCE - 2007-TIOL-277-CESTAT-MUM 3. CCE, Mysore Vs. TVS Motor Co. - Final Order No. 25567 to 25569/2013 dated PDI / FSC 8. He drew attention to page 51 of Order-in-Appeal wherein the Commissioner (Appeals) in his findings has allowed deduction in principle but held that the appellant also collected excise duty on the PDI charges and FSC. He submits this is factually incorrect. It was neither their submission before the adjudicating authority nor before the appellate authority. He submits that they never collected excise duty element on the PDI/FSC. He also explained with reference to sale price at the time of factory gate and withheld certain amount from the factory price till the dealer has executed PDI/FSC and immediately paid the balance amount by way of credit note as and when dealer submits the record and bill. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure even though they procured the raw material by availing concessional rate of service tax within Tamil Nadu, the taxability under section 3(4) does not arise. In the event of taxability, it is probably on the manufacture of final products and clearance by stock transfer. Therefore, the nature of levy has not changed and it is not a tax on purchase or on raw material. The case laws relied by the Revenue are not applicable. Further, he submits that since the incident of tax is on the manufacturer of finished goods the quantum / computation of 1% tax is calculated on the value of raw material is not the criteria for treating it as a purchase. 11. On the trade discount, the appellate authority has already allowed the benefit. He reiterated the findings at page 50 of Order-in-Appeal. He submits that the trade discounts are given as per the established practices which are already disclosed well in advance prior to removal of goods. Copies of the circulars were also relied by the appellate authority. He also drew attention to copy of sample circular dated 1999 and dated 26.7.1999 annexed at pages 31, 32 of Volume - I of paper book and submits that the company comes out with various d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LB) and TATA Motors Ltd. Vs. Union of India - 2012 (286) ELT 161 (Bom.) 15. Regarding the cash discount and method of finalization of assessment done by the adjudicating authority, he reiterated the findings in Order-in-Appeal at page 48 and also relied on the Annexure to Order-in-Original where the adjudicating authority has correctly demanded on the actual shortage and excess amount as ordered to be claimed as refund. 16. Learned counsel in his rejoinder countered the departments allegation. He once again reiterated the decision of the Tribunal in theirown case which is in their favour for the equalized freight and regarding cash discount, the Commissioner (Appeals) in fact has allowed the cash discount but only held that the assessee has not passed on the discount. 17. Regarding PDI/FSC, he again reiterated that they have not charged excise duty on the amount of deduction claimed from the customers. He also submits that even though the adjudicating authority has ordered for claiming refund, they have not filed any refund as they were contesting the issue that the amounts be adjusted against the finalization of the provisional assessment. 18. We have heard both side ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht in cases where the freight is not shown separately in the invoices. On the other hand, the notice that the rule itself specifically excludes the actual cost of transportation from the place of removal up to the place of delivery of such excisable goods and it requires a condition for showing the freight separately in the invoices, only in cases where the cost of transportation is charged to the buyer in addition to the price. Therefore, we are of the view that in the instant case where the freight from the place of removal to the delivery point is in-built in the price itself, the question of showing it separately in the invoices does not arise. In the following decisions, the Tribunal have allowed the abatement of freight from the assessable value/price even when the freight is not shown separately in the invoices. (i) Relying on the Supreme Court decision in the case of CCE, Noida Vs. Accurate Meters Limited 2009 (235) ELT 581 (SC), the Tribunal in the case of National Peroxide Ltd. Vs. Commissioner of Central Excise, Thane, 2013 (298) ELT 423 had allowed the abatement of price even when the freight is not shown separately in the invoices and collected by raising debit no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een claimed, is the price even when the said discount is not allowed. (ii) 2004 (167) ELT 401 in the case of Commissioner of Central Excise, Ghaziabad Vs. Pace Marketing Specialty Limited (Tri. - Del.), wherein the Tribunal held that the price received at the time of removal of goods is relevant for deciding the transaction value and when cash discount is claimed, the same cannot form part of the assessable value, so long it is discounted in the invoice itself. In view of the above, we hold that the appellants are eligible for deduction of cash discounts. 2. Abatement of Free Service Charges and Pre-delivery Inspection Charges. We find that in the assessee/appellant s own case, reported in 2016 (331) ELT 3 (SC),/2015-TIOL-299-SC-CX the Honble Supreme Court, in the case of pre-delivery inspection and After-sales service charges (free service charges), have held that where the dealer incurs expenditure for such charges after the vehicles are bought from the Manufacturer, the same cannot be added back to the sale price, charged by the Manufacturer from the dealers for computing assessable value. The Court also held that such post sale activity by the dealer is not relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity should have determined the assessable value by first deducting the abatement element and thereafter arriving at assessable value for calculating the differential duty/excess duty. Reliance made by the appellants in the case of ACCE Others Vs. MRF 1987 (27) ELT 553 (S.C), wherein it has been held that abatements should be cumulatively deducted from the cum-duty price to arrive at the cum-duty value and thereafter the assessable value should be arrived at. Accordingly, we direct the authority to recompute after adjusting the excess paid. Vis-`-vis the demand and finally arrive at the differential duty. 23. REVENUE APPEAL GROUNDS 1. Abatement towards cash paid under Section 3(4) of TNGST Act. In the Grounds of Appeal, the revenue has appealed against the Commissioner (Appeal)s findings that the said tax should be abated. The Commissioner (Appeals) has allowed the abatement of tax paid under section 3(4) of the TNGST Act on the ground that it is a sales tax and not a purchase tax. It is the case of the revenue that the said tax is not a tax on the final products of the Manufacturer but it is only a tax paid or payable on the materials purchased by the Manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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