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TMI Blog2019 (1) TMI 908X X X X Extracts X X X X X X X X Extracts X X X X ..... lers providing re-seller through the inventory reports to the appellants and in respect of which additional discount of 1% is provided to the re-sellers. More or less similarly worded agreements were in place during the periods disputed in the three SCNs. This has been the bone of contention between the appellants and the Revenue. SCNs issued were confirmed by OIO and OIA as detailed below: Appeal No./Party Date of SCN Period covered OIO/OIA E/1045/2009, Hewlett Packard India Ltd. 07.11.2001 October 2000 to August 2001 36/2009 dated 31.08.2009 E/503/2007, Hewlett Packard India Ltd. 14.09.2005 April 2001 to November 2002 63,64/2007 dated 29.03.2007 E/885/2011, Hewlett Packard India Sales (P) Ltd. 21.01.2010 January 2005 to March 2008 91/2010 dated 29.12.2010 2. Revenue has issued a SCN dated 26.03.2001 covering a period from April 1999 to Sept. 2000. It was contended by the Department that the appellants are remunerating the re-sellers with 1% trade discount included in the 30% trade discount. The effective trade discount is only 29% and 1% being the remuneration for the services rendered by the re-sellers appears to be in the form of a commission and not a trade di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) CCE, Calcutta Vs Alnoori Tobacco Products - 2004 (170) ELT 135 (SC). (ii) CCE, Bangalore Vs Srikumar Agencies - 2008 (232) ELT 577 (SC). 3.2. Ld. Counsel for the appellants submitted that net realization from the buyer alone is relevant for arriving at the assessable value under the New Valuation Rules w.e.f. 01.07.2000. He further submitted that transaction value includes various amounts charged by the assessee by reason of sale or in connection with the sale and also includes any expenses incurred by the buyer of the goods as the condition to the sale of goods; CBEC clarified vide Circular F. No. B-10/1/2000-TRU dated 12.05.2000 that as per the definition of the transaction value whatever is recovered from the buyer by reason of or in connection with the sale, whether payable at the time of the sale or at any other time is includable in the transaction value; CBEC vide Circular M.F. (DR) F. No. 354 /81/ 2000-TRU dated 30.06.2000 clarified that new Section 4 essentially seeks to accept different transaction values which may be charged by the assessee to different customers. He submitted that Hon'ble Supreme Court in the case of M/s. Grasim Industries Ltd. reported in 2018-T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n fact, it is not needed by virtue of the fact that the duty is chargeable on the net price paid or payable. Thus, if in any transaction a discount is allowed on declared price of any goods and actually passed on to the buyer of goods as per common practice, the question of including the amount of discount in the transaction value does not arise. Discount of any type or description given on any normal price payable for any transaction will, therefore, not form part of the transaction value for the goods, e.g. quantity discount for goods purchased or cash discount for the prompt payment etc. will therefore not form part of the transaction value. What is important is that it must be established that the discount for a given transaction has actually been passed on to the buyer of the goods. The differential discounts extended as per commercial considerations on different transactions to unrelated buyers if extended cannot be objected to and different actual prices paid or payable for various transactions are to be accepted for working assessable value..." 3.4. The Ld. counsel for the appellants further contended that in respect of EHTP unit valuation requires to be done under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts cannot be alleged on the same assessee when the facts of the case were known to them in as much as the Department issued a SCN in respect of identical facts for the earlier period. He also relied upon the following cases: (i) Caprihans India Ltd. Vs CCE, Surat - 2015 (324) ELT 8 (SC). (ii) CCE, Mumbai Vs Cona Industries - 2017 (352) ELT 12 (Bom.). (iii) MAA Communications Bozell Ltd. Vs CCE, Bangalore - 2017 (3) GSTL 89 (Tri. -Bang.) 3.6. Lastly, the Ld. Counsel has submitted that there is an overlap in respect of period April 2001 to August 2001 as the same has been raised in two SCNs issued on 07.11.2001 and 14.09.2005. He further submitted that as the demand is not maintainable on merits as wells as limitation, no penalty can be imposed. 4. Ld. AR for the Department has reiterated the findings of the OIO and has relied upon the following cases mainly to argue that extended period of limitation can be invoked on similar set of facts: (i) Salora International Ltd. Vs CCE, Delhi-II, 2018 (12) GSTL 173 (Tri. Del.). (ii) Audi Automobiles Vs CCE, Indore, 2018 (360) ELT 1062 (Tri. Del.). (iii) Gestamp Automotive India Pvt Ltd. Vs CCE, Pune-II, 2017 (7) GSTL 337 (Tri. Mum. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counts include 1% discounts for providing HP or HPs designate with Reseller Sell through and inventory Reports in a format specified by HP on a weekly basis'. We find that as observed by the Additional Commissioner in the OIO, there is not much material change in the agreements before or after 1.7.2000 as far as the provision of discounts is concerned. Both the agreements indicated that the appellants would remunerate/provide the wholesaler/Re-seller for the service of providing reports. Both agreements indicate that the additional discount of 1% is already included upfront in discount. However, in the new agreement, condition related to failure to comply with any of the requirements, appears to be not included in the main clause. The appellants submitted that the operation of the condition earlier or at present was similar. In case of default, the discount is reduced to the extent of 1% in subsequent sales. 5.3. The appellants submitted that in terms of agreement, the appellants extended 30% discount to the wholesalers from the list price. The fact that a minimum discount of 30% would be available is known and accepted both by the appellants and the wholesalers by virtue of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion about movement of different products in the market. The distributors are in a position to provide this information as they as they themselves stock these different products. These reports do not benefit the dealers but benefit HP only. The distributors are commercially indifferent to the results of their reports. Thus, M/s HP are benefitted by these reports compensating the distributers in the monetary terms by reducing the cost price of their products by 1% from the invoice price. The amount paid to the dealer as remuneration (discount) is an expense incurred by HP and the information given by the distributors is an ongoing service. It is an ongoing service rendered by distributors to M/s HP and is an input to determine the production pattern of M/s HP. Thus I hold that this discount is not in the nature of normal trade discount and the same is to be added to the cost and the transaction value has to be adjusted in accordance with the provisions of Rule 10(erstwhile Rule 9) of Customs Valuation Rules, 2007. 5.4. We find that the Commissioner has relied upon the appellant's own case Supra wherein this Bench has held at Para 5 as follows: "c) A reading of entire para 7, of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be equated. There is doubt that the agreement termed as 'Wholesale Programme Terms' is on principal to principal basis, the same vide para 10 provides for certain reports when it is read with para 7. That agreement does not create a relationship of principal and an agent, to constitute payments consequent thereto to be commissions. Trade discounts offered therein would be eligible abatements. However, we have found that it has not been demonstrated before us that these reports, consequent to para 10 are the same and serve the same purpose as the reports consequent to para 7 of 'Segment Operational Policy', which is a separate agreement entered into. Therefore, while property may be getting transferred from HP to the 'wholesale buyer' vide 'Wholesale Programme Terms' the need to enter into a detailed agreement termed 'Segment Operational Policy' detailing 'Reseller Sell-Through and Inventory Reports' and evaluation by HP of such functions and consequential 'remuneration' for the same, alongwith penal consequences for non-performance would indicate that another relationship is being created by 'Segment Operation Policy Agreement' between HP and the wholesale buyer; besides the 'W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s submissions was emphatic in his statements that penal clause have never or rarely been enforced. If that be so, then no nexus exists between the goods sold, pursuant to "Wholesale Programme Terms' and services rendered or required/anticipated, consequent to para 7 of the 'Segment Operational Policy'. It would not be creating the wholesale dealer for the very same goods to be an agent or a servant. No bar under the Central Excise Law or any law was shown, that same 'Wholesale buyer' cannot enter into another agreement to perform "additional services" for HP. In this view of the matter, the plea that 'wholesale buyer' could not be an 'agent' or 'servant' cannot survive. This Remuneration is for 'services' flowing from a different contract. Therefore, we cannot uphold the abatement of this 1% since we cannot find 'remuneration', 'rewards', 'recompense', 'salary' and 'compensations' to be equivalent to discount eligible for abatement under Section 4 as the same cannot be equated to discount. Therefore, we uphold the finding that this 1% should be disallowed since it is a commission. (e) In the facts of this case, the 'Wholesale buyer' is purchasing on principal to principal basis an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... answer the reference by holding that the measure of the levy contemplated in Section 4 of the Act will not be controlled by the nature of the levy. So long a reasonable nexus is discernible between the measure and the nature of the levy both Section 3 and 4 would operate in their respective fields as indica ted above. The view expressed in Bombay Tyre International Ltd. (supra) is the correct exposition of the law in this regard. Further, we hold that "transaction value" as defined in Section 4(3)(d) brought into force by the Amendment Act, 2000, statutorily engrafts the additions to the 'normal price' under the old Section 4 as held to be permissible in Bombay Tyre International Ltd. (supra) besides giving effect to the changed description of the levy of excise introduced in Section 3 of the Act by the Amendment of 2000. In fact, we are of the view that there is no discernible difference in the statutory concept of 'transaction value' and the judicially evolved meaning of 'normal price'. In view of the above, we hold that these discounts are not in the nature of discounts as understood in the common parlance. They are directly or indirectly an expenditure to the appellants. The r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Commissioner and Commissioner (A) in respect of the SCN 07.11.2001 (Appeal No. E/1045/2009) have observed that there has been no change in the nature of the discount given by the appellants. Therefore, we hold that when the Department is quite aware of the activities of the appellants, no suppression, nonetheless of a material fact with intent to evade payment of duty can be alleged. Further, SCN issued on 14.09.2005 and 27.01.2010 covering the period April 2001 to Nov. 2002 and January 2005 to March 2008 has been issued well after three years. As the Department has already raised a issue subsequent to the new Section 4 of CEA, 1944, it not open to the Department to issue two more SCNs invoking extended period. We find strength in the appellant's submission relying on the decision of Apex Court in the case of Nizam Sugar Factory (supra) wherein it was held that suppression of facts cannot be alleged on the same assessee when the facts of the case were known to them in as much as the Department had issued a SCN in respect of identical facts for the earlier period. The Ld. AR has relied upon certain cases and has submitted that extended period is invokable. We have gone through the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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