2018 (7) TMI 1188
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....t of "Demo Cars" whether the same have been rightly disallowed by the Courts below and added back in the assessable value. 2. Show Cause Notice dated 1st December, 2006 was issued for the period 14th November, 2005 to 31st August, 2006 on the appellants/manufacturer of passenger cars, as it appeared to Revenue that they have evaded the payment of Central Excise duty by short payment of duty amounting to Rs. 47,45,127/- on the clearances of passenger cars, described as "Demo Cars", contravening the provisions of Rule 4, 6, 8 of the Central Excise Rules, 2002 read with Section 4 of the Central Excise Act, 1944. 3. The appellant in response to enquiry, informed the Range Superintendent of Central Excise vide a letter dated 14th November, 200....
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.... that the discounts offer is not only passed on to the customer/dealer, but also ultimately passed on to the final customer. Further the amount received from the dealer is the sole consideration of sale of such Demo Car. Further, the discount amount is duly reflected in the invoices and the Demo Car is identifiable with its engine and chasis numbers for internal control purposes. It was further emphasized that the discount is uniformly given to all the dealers of the appellant company in India. While the overall discount amount is fixed, however, the discount rooted through the invoices will vary, depending upon the duty structure from time to time. Normally they are dispatching demonstration cars at an interval of six months, i.e. twice a ....
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....he modus operandi after studying the provisions of the Central Excise Law. When asked about the specific provision of the Central Excise Law, leading to such change in the said modus operandi, Shri Agarwal admitted his inability to quote any specific provision of Central Excise Law dealing with clearance of "Demo Cars" at a discounted price. On being pointed out the CBEC Circular No. F6/40/2003-CX1 dated 01/04/2003, has clarified that Central Excise payable on the "Demo Cars" would be the same as what is payable on normal cars, Shri Agarwal stated that he was aware of the said circular and examined the legal position on the matter. He also stated that he himself has decided the change the modus operandi and signed the letter dated 14/11/200....
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....ide the impugned order was pleased to uphold the OIO, only modifying the penalty imposed, observing that it is admitted fact that the appellant had informed the Department regarding the sale of "Demo Cars" at a discounted price to the dealers. Further, during investigation the appellant deposited the differential duty on such clearances under protest. There being no element of fraud, collusion, willful mis-statement, etc. and further the appellant themselves have intimated their business policy of clearing the "Demo Cars" on discount. It was observed that the elements of invoking extended period of limitation and penalty under Section 11AC, are the same. Further observed that by not paying a proper duty at the time of clearance of "Demo Car....
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....even though at the time of manufacturing there were no other members. The difference in "Demo Cars" and normal car is relevant in view of ruling in the case of Ford Motor Company of India Ltd. Versus Secretary of State India AIR 1938 PC 15 which has been relied upon in the subsequent ruling in the case of CCE Versus TVS Motors Co. Ltd. 2016 (331) ELT 3, (S.C.). He further said that rulings of this Tribunal in the case of Royal Enfield Versus CCE, Chennai 2013 (280) ELT 92 (Tri. - Chennai) & Ford India Pvt. Ltd. Versus CCE, Chennai 2014 (302) ELT 257 (Tri. - Chennai) & Hyundai Motor India Ltd. Versus CCE, Chennai 2017 (346) ELT 431 (Tri. - Chennai) are not relevant, as the rulings do not deal with the issue of Trade Discount. He also states ....
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.... that there is no element of advertisement in the discount given by the appellant company in clearance of the Demo Cars. We further find that the Show Cause Notices are against the concept of transaction value under Section 4 of the Act. We further find that the discount has been given by the appellant in terms of the business policy, which was widely known as "Trade Discount" and they had also made adequate disclosures to the Revenue. We further find that the Trade Discount under dispute was known to all, prior to removal of the goods, and the same have also been given at the time of clearance. Accordingly, we hold the same is permissible under Section 4 of the Act. We find that the facts herein are squarely covered by the ruling of the Ap....