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M/s Pearl Drinks Ltd. Versus CCE, Delhi -I (vice-versa)

2016 (8) TMI 839 - CESTAT NEW DELHI

Valuation - determination of assessable value u/s 4 by deducting permissible deductions from the wholesale price - Held that:- Revenue's contention that the assessee did not raise the point earlier that the expenses under various heads furnished were provisional is factually incorrect as we have already recorded that the assessee had clearly stated in its letter that the deductions under various heads were on provisional basis and the actual expenditure can be ascertainable only after finalisati .....

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al deductions claimed for the year 1994-1995 (viz. ₹ 58982962/- axiomatically no demand would survive after allowing deduction of the actual expenses relating to the said permissible three heads. Consequently we need not go into the merits of disallowing the expenses incurred under other various heads for the purpose of deciding whether the impugned demand is sustainable. - As regards the contention of Revenue that by adopting the actual figures for deduction, the Commissioner has gon .....

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ated:- 15-7-2016 - Mr. S.K. Mohanty, Member (Judicial) and Mr. R.K. Singh, Member (Technical) Shri R.K. Manjhi, DR for the appellant Shri V.M. Dolphode, Advocate for the respondent ORDER Appeal No. E/5490/2004 is filed by the appellant/assessee against Order-in-Original No. 35/2004 dated 30.9.2004 passed by the Commissioner, Central Excise, Delhi-I. The chronology of events leading to this appeal is summarised below: Sr. No. Date Description of documents Page Nos. 1. 1.6.1994 Letter from Pearl D .....

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nation of assessable value 30-33 (Paper Book filed by Pearl Drinks Ltd.) 3. 16.3.1995 Pricelists filed by M/s Pearl Drinks Ltd. effective from 16.3.1995 in Annexure-II giving sale price and deductions on transportation, container service and other service charges including trade discounts etc. 28-29 (Paper Book filed by Pearly Drinks Ltd.) 4. 30.6.1995 Letter from M/s Pearl Drinks Ltd. to Supdt. of Central Excise, MOD-I enclosing declaration of assessable value in Annexure-II effective from 1.7. .....

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e various heads 19-24 (Paper Book filed by Pearl Drinks Ltd.) 6. 30.10.1995 Letter from M/s Pearl Drinks Ltd to Supdt. Central Excise, MOD-I regarding deductions claimed, it was stated that the assessable value may kindly be treated as provisional and it is only at the end of financial year after the finalisation of the accounts, that it is possible to determine the exact amount under each of the various heads. Further, it was claimed that since all the admissible abatements worked out are more .....

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y has been paid, that they had requested for provisional assessment and actual figures of deductions admissible will be higher. 21-31 (in cross-objection) 9. 30.5.1996 Letter from Pearl Drinks Ltd. to Asstt. Commissioner of Central Excise requesting to defer the decision till the case relating to the earlier period is disposed of by the Ld. Commissioner. 15 10. 14.2.2001 M/s Pearl Drinks Ltd. filed written submissions before Commissioner, Delhi-I. In para 3, it was submitted that even if all ded .....

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E/1345/2002-EX. that there is enough cushion available even if all deductions are disallowed (para 2) 44 (in Pearl Drinks Ltd. cross-objection) 14. 22.7.2002 Honble Tribunal passed Final Order No. 316/2002-A and Misc. Order No. 51/2002-A dismissing the Appeal filed by Commissioner as the Commissioners order has already merged in the Final Order of Honble Tribunal dated 24.1.2002. 15. 6.7.2010 The Honble Supreme Court vide their order allowed the appeal filed by revenue and remanded the matter f .....

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t was submitted that there is adequate cushion available for setting off the alleged inadmissible expenditure and no duty is payable, as total inadmissible expenditure is ₹ 97,04,384/- and total expenditure incurred on items already allowed is ₹ 95585556/- as against the actual deductions availed are ₹ 7,95,89,563/- and therefore no duty is payable. 1-14 (paper book filed by Pearl Drinks Ltd.) 19. 25.6.2012 Order No. 03/D-I/2012 passed by Commissioner of Central Excise, Delhi-I .....

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been making clear that the figures pertaining to various heads under which deductions were claimed were provisional and estimated in the month of March 1994 and the actual figures for the period 1994-1995 (the period involved in this case) would be known only at the end of financial year 1994-95. (ii) The deductions on account of transportation, container service and trade discount have been held to be admissible in the show cause notice itself. However, the deductions on account of the followi .....

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er trade discount 0 (h) Breakage, Burst and Leakage of aerated water (11%) 1,333,990 10,033,582 (iii) It is not necessary to individually decide upon the admissibility of the deductions claimed under various heads ((a) to (h) above) which were disallowed for the reason that the actual expenses in respect of heads which were held to be deductible come to ₹ 95585556/- while the total deductions claimed by them as per the show cause notice (based on the provisional figures) amounted to ₹ .....

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ions of ld. Advocate and also of the ld. DR. For the reasons which will become obvious in the following paragraphs, for the purpose of deciding this case we need not go into the merits of the deductibility or otherwise of the expenses incurred under the heads mentioned at (a) to (h) above which were held to be non-deductible for determining assessable value leading to the impugned demand. 5. The appellant in its letter dated 1.6.1994 had written to Asstt. Commissioner of Central Excise, MOD-I th .....

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s issued proposing disallowing deductions of expenses under heads (a) to (h) mentioned earlier without waiting for the final figures. In the appellants written submissions, it was clearly submitted that even if all deductions proposed to be disallowed were disallowed, total deductions under heads which were held to be admissible in the show cause notice itself were higher than the total deductions claimed (out of which only a part was denied by the adjudicating authority and impugned demand conf .....

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ses under the heads held to be not includible in the assessable value, then the assessable value will be less than the assessable value worked out on the basis of the primary adjudication order and as a consequence, no differential duty would arise. The chart of actual expenses under various heads (submitted by the appellant duly certified by the Chartered Accountant, the figures of which were not contested by Revenue during hearing) given below supports this view : Transportation Rs. 1994-95 De .....

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ess; profit on sale of containers 3,063,964 Interest on containers 91,100 Breakage, Burst and Leakage 12,127,184 Lease Charges 10,323,507 Total 43,965,321 Net production for own sale 2,644,696 Returnable container services per case 16.62 TRADE DISCOUNTS Contract arrangement 18,923.679 Other trade discounts 2,750,072 Total 21,673,751 Net production for own sale 2,644,696 Trade discount per case 8.20 TOTAL EXPENSES (A+B+C) 95,585,556 Per C/S 36.14 Sl. No. Description Amount Amount 1. Expenses incu .....

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edged customers 0 g) Other trade discount 0 h) Breakage, Burst and Leakage of aerated water (11%) 1,333,990 10,033,582 3. NET ADMISSIBLE EXPENDES (1-2) 85,551,974 4. Deduction claimed by company in 1994-95 as per SCN 58,982,962 5. Cushion available i.e. Deduction not claimed (3-4) 26,569,012 6. Revenues contention that the assessee did not raise the point earlier that the expenses under various heads furnished were provisional is factually incorrect as we have already recorded that the assessee .....

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mand confirmed on the ground that certain deductions were not admissible is sustainable or not. 8. It is a fact that even as per the show cause notice expenses on account of transportation, container services and trade discounts were held to be deductible and accordingly provisional figures relating to these heads were allowed to be deducted in the show cause notice itself. The Honble Supreme Court vide its order dated 15.5.2015 observed as under : By the impugned order, the Customs, Excise and .....

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quest was made to the assessing officer for provisional assessment as the actual expenditure could not be communicated at the time of assessment having regard to the nature of such expenses. It is submitted that this vital aspect of the matter is glossed over by the CESTAT. It is also pointed out before us that in the next assessment year, i.e., assessment year 1995-1996, this very contention is accepted by the Commissioner when actual expenses were produced and benefit thereof has been extended .....

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ordingly. The appeal is disposed of accordingly. 9. It is evident from the Hon ble Supreme Court order also that once expenses under certain heads were allowed to be deducted, then the actual expenses under those heads are to be deducted. 10. We find that the total figure of ₹ 95585556/- claimed to be the actual expenses under the three heads namely transportation, returnable container services and trade discounts was taken note of by the Commissioner while deciding the case involving same .....

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deductible from the wholesale price is ₹ 9558556/- which is far more than the total deductions claimed for the year 1994-1995 (viz. ₹ 58982962/- axiomatically no demand would survive after allowing deduction of the actual expenses relating to the said permissible three heads. Consequently we need not go into the merits of disallowing the expenses incurred under the heads (a) to (h) mentioned earlier for the purpose of deciding whether the impugned demand is sustainable. E/3165/2012 1 .....

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heads are dropped. 12. We have perused the impugned order-in-original dated 25.6.2012. Part of para 6 of the said order is reproduced below: I have gone through the show cause notice, the party vide their letter PDL/Finance/Excise/195-90/15064 dated 2.11.1995 intimated that they claimed deduction of ₹ 31.27 per crate for 250/300 ml and ₹ 28.08 per crate for 300/500/1000 ml Soda in addition to the set off of Central Excise duty and sales Tax, for the year 1995-96 (as mentioned in par .....

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the party for the year 1994-95 and quantity of clearance effected by the party during the previous year, the reliance of the department on the inadmissible deductions amounting to ₹ 1,37,97,580/- as worked out is not correct and misplaced in view of the fact that the party was not asked by the department to provide the details of total deductions claimed by them during the year 1995-96 after they filed the price list for deduction of ₹ 31.27 per crate and ₹ 28.08 per crate for .....

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hat the show cause notice has been issued without appreciating all aspects of the issue and not taking into account the facts/submissions brought to the knowledge by the party at the appropriate time. In the presence of adequate cushion being available as discussed above and also claim for the same by the party, it is viewed that though the relevant issues raised in the show cause notice hold good in view of the evidence brought out in the show cause notice and consequently the resultant demand .....

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s emerges as under: S. No. Description Amount 1. Total deductions claimed by the party during 1994-95 Rs.9,55,85,556/- 2. Total inadmissible deductions under eight heads pointed out by the Department Rs.1,37,97,580/- 3. 1-2 Rs.8,17,87,976/- 4. Deductions claimed by the party in 1995-96 ₹ 7,95,89,563/- 5. Cushion available i.e. deductions not claimed (3-4) Rs. 19,98,413/- Since the party s claim for taking shelter under the availability of cushion is thus supported by adequate admissible de .....

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able on the party either under Section 173Q or Rule 52A of the erstwhile Rules, 1944. It is evident that the Commissioner has adopted the same reasoning for dropping the demand which has been adopted by us in earlier paras while deciding Appeal No. E/5490/2004 and therefore the Revenues appeal is obviously unsustainable. 13.. As regards the contention of Revenue that by adopting the actual figures for deduction, the Commissioner has gone beyond the remand order dated 21.4.2011 of CESTAT, we have .....

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