Customs, Excise and Gold Tribunal - Mumbai
Pepsico India Holdings Ltd. vs Commissionr Of Central Excise on 12 May, 2005
Equivalent citations: 2005(187)ELT382(TRI-MUMBAI)
ORDER S.S. Sekhon, Member (T)
1.1 The appellants are, inter alia, engaged in the manufacture of aerated water and had started production in the month of May 1995 at the factory situated at Naroda.
1.2 They filed price declarations declaring the price of aerated water sold to eh wholesale dealers for the purpose of determination of assessable value. From this price, the appellants had deducted the freight expenses at equalized rate of Rs. 4.55 per crate, turnover tax at the equalized rate of around Rs. 1.70 per crate. Apart from this the appellants have also claimed deduction @ Rs. 2/- per crate towards the discount extended by them to the wholesale dealers.
1.3 By the impugned Order-in-Original passed by Commissioner of Central Excise, the following demands have been confirmed :
a) Rs. 2,70,645/- being the demand on freight amount collected in excess of the actual freight expenses incurred;
b) Rs. 13,16,214/- on the ground that the appellants have wrongly claimed deduction towards discount @ Rs. 2/- per crate and also Rs. 2/- per crate had been recovered from the distributors;
c) Rs. 5,06,082/- being the demand of duty on the amount alleged to be recovered from the distributors towards turnover tax. & penalty of Rs. 10 lakhs imposed on the appellant.
2.1 As amount of Rs. 2,70,845/- had been demanded from the appellants on the ground that the appellants had claimed deduction towards freight @ Rs. 4.55 per crate and collected an amount of Rs. 37,42,985/- but the appellants had actually incurred an amount of Rs. 30,66,373 therefore an amount of Rs. 6,31,162/- collected in excess of the actual amount of expenses incurred towards transportation of good was held liable to duty. In view of the decision of the Supreme Court in the case of Baroda electric Meters Ltd. v. CCE 1997 94 ELT 13 this amount cannot be confirmed as duty.
3.1 As regards the appellants on adhoc basis claimed deduction of Rs. 2/- per crate of discount.
3.2 Notice has been issued to the appellants to deny the claim of the appellants in respect of the abatement to wards trade discount on the ground that the appellants had not passed on this amount of Rs. 2/- which was claimed s deduction from the price to arrive at the assessable value. The appellants case is that during the period in question they had extended an quantity Discount Scheme and had extended the discount of Rs. 4.70 per crate. In support they submit a certificate from Chartered Accountants, who verified the accounts of the appellants, certifying that an amount of Rs. 4.70 was extended by the appellants during the period in question towards quantity discount. Circulars also had been issued by them for the above scheme of one crate free for two paid for. Every distributor who purchased tow crates of soft drink would be given on crate of soft drink free. The quantification of the discount extended under the scheme was certified by the Chartered Accountant At Rs. 4.70 per crate. The fact that this scheme was introduced and extended to the distributors is not disputed by the Commissioner in the impugned order. The Commissioner had only observed that this scheme is not a trade discount eligible for deduction and it was only for getting deposits of crates. The Scheme in any quantity discount therefore the same is eligible for deduction as settled position of law is that discount given in kind are allowed if the goods under assessment themselves are given s discount instead of cash or reduction in price. The Tribunal in the case of Glaxo (I) Ltd reported at 1995(76) ELT 451 has held that the trade discount may be in cash or in kind. The Central Board of Excise & Customs in the circular F. No. 312/1/75 CX 10 dated 8.8.75 had specifically clarified that introductory discounts are admissible deduction in determining the assessable value. Similar type of quantity discount scheme, known s display scheme, where outside a retail outlet displays would entitle the dealers to get free soft drink. The Circular for this scheme was communicated by the appellants to their various dealers. Copies of the circulars issued to dealers explaining the discount scheme are placed in the paper book. According to the certificate produced by the appellants the total amount of discount extended in terms of these schemes was to the extent of Rs. 4.70 per crate. Therefore, this abatement claimed by the appellants cannot be denied and duty therein recovered.
4.1 The impugned order has denied abatement towards turnover tax (TOT) on the ground that the appellants had collected the same from the buyers and they were not authorized to collect this amount from the buyers and they were not authorized to collect this amount from the distributor according to the Sales Tax Act, 1969 of Gujarat Government and therefore price cannot inclusive of the said amount towards turnover tax. Based on this, the Commissioner held that the abatement towards turnover tax cannot be allowed.
4.2 The appellants produced illustrative copies of invoices and showed that they had not collected any amount as representing TOT from their wholesale dealers and distributors. This is not disputed. However, the Commissioner has come to the conclusion that the appellants had recovered the amount towards turnover tax only on the ground that the appellants had claimed deduction from the price towards turnover tax to arrive at the assessable value and therefore the said amount was included in the price and has been recovered. This basis given in the impugned order is incorrect.
4.3 On the question regarding the eligibility to claim deduction wards TOT, the law is well settled by the following decisions :
(a) Cadbury India LTD v. CCE (1993) 63 ELT 163
b) Mysore Acetate and Chemicals Co. Ltd. v. CCE 1992 (59) ELT 441
c) Associated Pigments Ltd. v. CCE 1989 40 ELT 186
d) Bangalore Paints Ltd. v. CCE 2001 (132) ELT 396 Following the same, the deduction claimed by the appellants towards TOT is permissible the impugned order which failed to consider the aforesaid decisions is liable to be set aside.
5. For the reasons as above, penalty under Rule 173Q is not also impassable on the appellants.
6. In view of the findings the order is set aside and appeal allowed.