TMI Blog2024 (4) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... depot to non-related buyers and price being the sole consideration for sale - the BSOs allow discounts to final customers beyond the price circulars that are duly known to the appellant at the time of removal of goods from the factory (conveyed through the internal communications of the CMO). Such discounts are allowable as deduction from the price of the goods for the purpose of determination of duty due thereon. In terms of Rule 7 of the Valuation Rules, any discount given at the time of clearance of goods ought to be allowed for assessment of goods transferred to the BSO when the same is passed on to the final customers - with reference to an Across the Board Rebate (equivalent to MPR), this Tribunal in the appellant s own case STEEL AUTHORITY OF INDIA LTD. VERSUS COMMISSIONER OF C. EX., RAIPUR [ 2005 (11) TMI 10 - CESTAT, NEW DELHI] had held The law with regard to the valuation of the goods is that the goods should be assessed at the net price, i.e. minus the discount, to Central Excise duty. In the present case, it is clear that the valuation adopted by the appellant was only more than the net realisation at the depot stage. The rebate as was known by way of MPR and uniformly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icles like pig iron, ingots, blooms, angles, channels, etc., falling under Chapter 72 and Chapter 73 of the Central Excise Tariff Act, 1985 The Tariff Act . The products manufactured by the appellants are sold by them at the factory gate as well as through their depots / Branch Sales Offices (BSOs) by way of stock transfers for onward sale. The appellant submits that the pricing of the goods is determined by their Central Marketing Organization (CMO) which decides the prices at which the goods are required to be sold from the plant as well as the depots / BSOs and accordingly releases the price lists for the various goods for sale. The appellant contends that apart from the price list, the CMO allows the plant as well as the depots / BSOs to provide further discounts uniformly to all buyers on the prices indicated in the price lists so as to match the price of the competitors located at various places. Thus, at the time of sale of goods from the depots / plants / BSOs, the list price is adjusted by giving different rebates / discounts referred to as Movement Plan Rebate (MPR). This adjustment of prices, by way of MPR, is worked out by a high-powered committee comprising of the Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade discount, which is allowed for both direct sales from factory gate as well as dispatches to BSOs and is not refundable by the buyers under any circumstances. ii. The MPR is communicated to all the plants and BSOs for further communication to the customers. In order to arrive at the normal transaction value i.e., the value at which goods are sold from BSOs, prices mentioned in the price circular are adjusted by way of providing MPRs. Further, as per the system in vogue, for dispatch to BSOs, at the time of issuance of invoice, the system searches for transaction value for the past two months and if no transaction value is available, then the system raises invoices based on the price circular less MPRs. iii. The MPRs are shown separately on the invoices. iv. The purpose of providing the MPRs is to arrive at a realistic price prevalent in the market and correctly assess the excise duty thereon. 3.5 The appellant also assails the adjudication order on the grounds of limitation invoking the extended period as the Show Cause Notice was issued on 16.05.2013 proposing demand for duty for the period from 29.05.2008 to 07.01.2013 based on audit records, inter alia contending that the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o appreciate the admissibility of discounts, it would be necessary to refer to Section 4(1) of the Act as well as Rule 7 of the Valuation Rules. The same are therefore enumerated hereunder: - ▪ Section 4(1) of the Central Excise Act, 1944: SECTION 4. Valuation of excisable goods for purposes of charging of duty of excise. (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to their value, then, on each removal of the goods, such value shall - (a) in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, be the transaction value; (b) in any other case, including the case where the goods are not sold, be the value determined in such manner as may be prescribed. . ▪ Rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000: RULE 7. Where the excisable goods are not sold by the assessee at the time and place of removal but are transferred to a depot, premises of a consignment agent or any other place or premises (hereinafter referred to as s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... With regard to the second ground of demand i.e. ineligibility of ABR for deduction while fixing/assessing the value, we find that the appellant had established before the lower authorities that the price realized from the buyers of the goods from the depots were invariably lower than the price at which the goods had been assessed to duty at the time of their removal from the factory. The ABRs in question were determined by the Central Marketing Organisation of the steel plant on a monthly basis and conveyed to the sales depots. It is seen that the sales depots either charged sales prices after deducting the ABRs or the ABRs are passed on to the customers through credit notes. The appellant had also produced the certificate from the Chartered Accountant showing that the ABR has actually been passed on. Before us also, the learned Counsel has produced sample invoices as well as credit note register showing the passing on of ABRs in the invoices themselves or through credit notes. The submission of the learned Counsel for the appellant is that, as a matter of fact, as against an ABR of over Rs. 681 crores, reduction claimed while assessing the goods was only Rs. 449 crores. The law w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Chartered Accountant s certificate furnished both in the said case and the present case referred to supra, establishes that the cumulative value of the ABRs (in the present case, MPRs) allowed from the depot exceeded the ABRs (or MPRs) as claimed by the appellant. 10. The Hon ble Apex Court s decision in the case of Purolator India Ltd. v. Commissioner of Central Excise, Delhi-III [2015 (323) E.L.T. 227 (S.C.)] has also upheld the admissibility of discounts that were passed on to the buyers and were known at the time of clearance of goods as eligible deduction for the purpose of determination of the assessable value. 11. In support of their proposition, the appellant has also drawn support to the ratio of the law as pronounced in the case of Biochem Pharmaceutical Industries v. Commissioner of C.Ex., Mumbai-III [2016 (337) E.L.T. 276 (Tri. Mumbai)] pointing out that such discounts were clearly admissible. 12. For the reasons foregoing and the settled position of law, we do not find sustenance in the order of the Ld. Commissioner under challenge herein. We therefore set aside the same and allow the appeal filed by the assessee. ( Operative part of the order was pronounced in open ..... X X X X Extracts X X X X X X X X Extracts X X X X
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