Custom, Excise & Service Tax Tribunal
Jaquar And Co. Ltd vs Commissioner Of Central Excise on 14 June, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. IV
Excise Appeal No. 56268-56269,56447-56448 of 2013
[Arising out of Order-In-Appeal No. 20-21/D-I/2012 dated 10.12.2012 passed by Commissioner of Central Excise, New Delhi]
For approval and signature:
Hon'ble Ms. Archana Wadhwa, Member (Judicial)
Hon'ble Mr. V Padmanabhan, Member (Technical)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
Seen
4
Whether Order is to be circulated to the Departmental authorities?
Yes
Jaquar And Co. Ltd. Appellant
Rajesh Mehra, Director
BB Duggal, Director
Vs.
Commissioner of Central Excise Respondent Delhi I
Appearance:
Shri B L Narasimhan, Advocate for the Appellants
Shri R K MIshra, AR for the Respondent
CORAM:
Hon'ble Ms Archana Wadhwa, Member (Judicial)
Hon'ble Mr. V Padmanabhan, Member (Technical)
Date of Hearing/ Decision: 14.06.2016
FINAL ORDER NO . 52188-52191 /2016
Per Archana Wadhwa:
All the four appeals are being disposed of by a common order as they arise out of same impugned order passed by the Commissioner. Inasmuch as the impugned order is in respect of two different units of M/s. Jaquar and Co. Ltd., two different appeals stand filed by them.
2. As per facts on records in respect of unit no.1 are that on scrutiny of the trial balance for the period 2005-06 to 2009-10, sample copies of the commercial invoices an ER-1 return for the relevant period of the another unit of the party situated at D-28, SMA Indl. Area, G.T.Karnal Road, Delhi (unit No.1), it was observed that the assessable value shown in the Central Excise invoice was 4% less than the assessable value shown in the commercial invoices for the same goods and accordingly, the unit No.1 of the appellant had short paid the duty as per the value shown in their commercial invoices. It was also observed that the value as per ER-1 return (assessable value + duty) did not tally with the domestic sales value shown in the trial balance for the period 2005-06 to 2009-10. The party was asked to submit the reconciliation vide letter dated 11.10.2011. On perusal of the same, it was found that the unit No.1 of the appellant had shown in the chart that branch transfer for the period 2009-10 was 31,729,951/-, for the period instead of Rs.29,505,468/- shown in the trial balance to intentionally claim an excess of Rs.22,24,483/- to reconcile the assessable value of trial balance with the assessable value of ER-1 return. Further, it was also observed that none of the value of cash discount shown for the year 2005-06 to 2009-10 was tallying with the value shown in the trial balance.
3. As per facts on records, in respect unit No.2 are that the company was allowing rebate to dealers as per price on project supplies made to different buyers. These dealers were found to be availing these rebates by way of issuing debit notes to the assessee and were also charging service tax on these debit notes. The assessee was availing credit of service tax on the strength of these debit notes, which were not valid documents prescribed under Rule 9 of Cenvat Credit Rules. It was also alleged that service tax paid on sales commission paid to the dealers was not admissible to the assessee as the said service provided by the dealer to the assessee was not an input service for manufacture of final product and it was post manufacturing activity. Sale commission was being paid by the assessee to the dealers only on effecting the sales which arose only once the process of manufacturing was completed. Availment of Cenvat Credit of service tax and utilization thereof for payment of central excise duty resulted in clearance of excisable goods without payment of duty.
4. As regards the first issue that a fact of actual availment of cash discounts by the assessees customer is concerned, learned advocate appearing for the appellant submits that though they have produced complete reconciliation of figures before the adjudicating authority, it has not accepted the same. Such reconciliation in any case, would no longer be relevant inasmuch as the legal issue now stands decided by the Honble Supreme Court in the case of Purolator India Ltd. vs. CCE [2015 (323) ELT 227 (SC)]. The order of the Tribunal passed in said case reported as [2005 (182) ELT 385 (Tri-Del)] was set aside, laying down that after 1.7.2000, when the provisions of section 4 of Central Excise Act were amended, it would be transaction value in each and every case which would be adopted as assessable value for the purpose of payment of duty. In other words, Tribunal held that wherever the discounts have not been availed by the customers, even though offered by the assessee, the actual payment made by the customers would be liable to taxes. He said the order of the Tribunal stands reversed by the Honble Supreme Court. He has taken us to the said decision of the Honble Apex Court.
5. On going through the said decision, we find that the issue before the Honble Supreme Court was that as to whether cash discounts offered by the manufacturer at the time of clearance of the goods from the factory gate would get deducted from the total value of the goods so as to arrive at the correct assessable value, in terms of new amended provisions of Section 4. Honble Supreme Court, after taking note of entire developments in the field of law, observed as under:
18.?It can be seen that Section 4 as amended introduces the concept of transaction value so that on each removal of excisable goods, the transaction value of such goods becomes determinable. Whereas previously, the value of such excisable goods was the price at which such goods were ordinarily sold in the course of wholesale trade, post amendment each transaction is looked at by itself. However, transaction value as defined in sub-clause (3)(d) of Section 4 has to be read along with the expression for delivery at the time and place of removal. It is clear, therefore, that what is paramount is that the value of the excisable goods even on the basis of transaction value has only to be at the time of removal, that is, the time of clearance of the goods from the appellants factory or depot as the case may be. The expression actually paid or payable for the goods, when sold only means that whatever is agreed to as the price for the goods forms the basis of value, whether such price has been paid, has been paid in part, or has not been paid at all. The basis of transaction value is therefore the agreed contractual price. Further, the expression when sold is not meant to indicate the time at which such goods are sold, but is meant to indicate that goods are the subject matter of an agreement of sale. Once this becomes clear, what the learned counsel for the assessee has argued must necessarily be accepted inasmuch as cash discount is something which is known at or prior to the clearance of the goods, being contained in the agreement of sale between the assessee and its buyers, and must therefore be deducted from the sale price in order to arrive at the value of excisable goods at the time of removal
26.?In view of what has been said above, it is clear that cash discount has therefore to be taken into account in arriving at price even under Section 4 as amended in 2000.\
6. As is seen from the above, it stands held by Honble Supreme Court that even after the amendments in section 4, the cash discounts have to be taken into account for arriving at the price on which duty is required to be paid. Though the appellants have taken a categorical stand before the authorities below that the complete reconciliation was being made by them at the end of manufacturer, during the period involved in the present appeal, and wherever the cash discounts offers were not availed by the customers, they were paying duty, we, at this point of time, are of the view that reconciliation has become the secondary issue in view of the legal issue having been settled in favour of the assessee. If the cash discounts offered by the appellant, are required to be considered and the assessable value has to be recalculated based upon such offers of discounts, in terms of the Supreme Court decision, the present demand of duty on the ground that such cash discounts do not stand availed by the appellants customers in most of the cases, falls to the ground. As such, on this count, we are of the view that demand cannot be confirmed against the appellant.
7. As regards the second issue i.e. availment of cenvat credit of Service tax paid by the consignment agent under the service on the basis of debit notes raised by them, we find that the issue stands decided in the same appellants case vide Final Order Nos. A, 52041/2015-SM (BR) dated 23.6.2015 ; A/51656-51657/2014-SM(BR) dated 04.04.2014 and A/54830/2014-SM(BR) dated 30.10.2014. Inasmuch the said issue stand decided, the confirmation of demand in the said ground would also not sustainable.
8. In view of the foregoing, we set aside the impugned order and allow all four appeals by setting aside the confirmation of demand as also imposition of penalty on all the appellants.
(dictated and pronounced in the open court )
( Archana Wadhwa ) Member(Judicial)
( V Padmanabhan)
Member(Technical)
ss
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