Custom, Excise & Service Tax Tribunal
Pi/285/2006 vs Dated 10.08.2006 on 17 August, 2016
IN THE CUSTOMS, EXCISE AND SERVECE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. I APPEAL NO. E/1369/05, E/1928 to 1930, 2728/06 & E/180/07 Arising out of - Appeal No. Appellant Respondent Order-in-Appeal No. & Date E/1369/05 M/s Mercedes-Benz India Pvt. Ltd. CCE, Pune-II PI/41/2005 Dated 13.01.2005 E/1928/06 M/s Mercedes-Benz India Pvt. Ltd. CCE, Pune-I PI/470/2005 Dated 23.12.2005 E/1929/06 M/s Mercedes-Benz India Pvt. Ltd. CCE, Pune-I PI/471/2005 Dated 23.12.2005 E/1930/06 M/s Mercedes-Benz India Pvt. Ltd. CCE, Pune-I PI/472/2005 Dated 23.12.2005 E/2728/06 M/s Mercedes-Benz India Pvt. Ltd. CCE, Pune-III PI/159/2006 Dated 27.04.2006 E/180/07 M/s Daimler Chrysler India Pvt. Ltd. CCE, Pune-I PI/285/2006 Dated 10.08.2006 Passed by: Commissioner of Central Excise (Appeals), Pune-I. For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) =====================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ===================================================== Appearance: Shri Gajendra Jain, Advocate with Shri Rajesh Ostwal, Advocate for Appellants Shri Ajay Kumar, Jt. Commr. (A.R.) for Respondents CORAM: HONBLE SHRI M.V. RAVINDRAN, MEMBER (JUDICIAL) HONBLE SHRI C.J. MATHEW, MEMBER (TECHNICAL) Date of Hearing: 17.08.2016 Date of Decision: 17.08.2016 ORDER NO. Per: M.V. Ravindran:
All these appeals are directed against Orders-in-Appeal No. PI/41/2005 dated 13.01.2005, PI/470/2005 dated 23.12.2005, PI/471/2005 dated 23.12.2005, PI/472/2005 dated 23.12.2005, PI/159/2006 dated 27.04.2006 and PI/285/2006 dated 10.08.2006 passed by the Commissioner of Central Excise (Appeals), Pune-I.
2. Since these appeals are in respect of the very same appellant and the issue being the same, they are being disposed of by a common order.
3. The relevant facts that arise for consideration are appellants were clearing their final product i.e. Motor Vehicles to their dealers at a fixed rate and allowing the quantity discount based on turnover of the said dealers. The discount proposed to the dealers is determined on the calendar year based performance on off take. On the request of the appellant herein, the assessment were provisional. The said provisional assessment were finalised; the turnover discount, adjustment towards excess and short payment and extending discount to the dealers even for non-adjustment was not granted and demand was for differential duty along with interest which was confirmed by adjudicating authority. The first appellate authority also rejected the appeals filed by the assessee; on the same reasoning.
4. Learned Counsel submits that as regards turnover discount to the dealers slab wise, it is not in dispute the said discount was made known to dealers in advance and was also passed on to them at the end of year on performance review. The lower authorities have rejected the contentions in the finalisation only on the ground the turnover discount was quantified at the end of calendar year, wherein dealer has sold the cars of previous year. As regards the first issue he would submit that deduction of all turnover discount are squarely covered by the decision of Dabur India Ltd. Vs. CCE [2003 (157) ELT 426 (T)], Mark Auto Industries vs. CCE [2003 (162) ELT 261 (T)], Rama Vision Vs. CCE [2003 (162) ELT 664 (T)] and Hindustan Lever Vs. CCE [2005 (189) ELT 434 (T)]. As regards the second issue of denial of adjustment of excess duty paid to short payment of duty, he would submit that the excess payment of duty and short payment of duty on finalisation was sought to be denied on the ground that the excess payment needed to be considered from the angle of unjust enrichment. He would submit that the issue is no more res integra as the Hon'ble High Court of Karnataka in the case of Toyota Kirloskar Auto Parts Pvt. Ltd. Vs. CCE, LTU, Bangalore [2012 (276) ELT 332 (Kar.)], and Tribunals decision in the case of Raptakos Brett Vs. CCE [2016-TIOL-138-CESTAT-MUM] categorically laid down law such as to adjustment the excess payment of duty and short payment of duty can be made when provisional assessment are finalised. Same view had been taken by the Tribunal in the case of Jonas Woodhead & Sons Vs. CCE [2015 (329) ELT 577 (T)]. He would submit that the demand confirmed under this head is liable to be set aside. It is his further submission that as regards the issue of allowing of discount even to non-achieving dealers, the said discount was passed in order to encourage the dealer to perform better and achieve the targets.
5. Learned Departmental Representative would submit as under-
i) Appellant is clearing goods viz. Motor vehicles falling under the chapter CTH 8703.90.
ii) Motor vehicles are cleared to their dealers at the fixed price and allowing discount which is not known at the time of clearance .The Appellant would know the discount proposed to their dealers only after completion of calendar year .These rate of discount is based on performances of the dealers vis a vis sales, as since is not known at the time of clearance appellant requested to asses it under provisional assessment under rule 7 of CER 2002. Provisional Order was passed vide order dated 26/9/2000.
iii) Provisional order was passed on the basis of Quantity Discount Scheme made known to assesse and existing after 01/6/2003 onward.
iv) Appellant intimated scheme vide lr no 2/6/03 ie duty discount for 'E','C' and 'S' class Mercedes cars .
v) It was observed that some of the car vehicles sold by the dealers either pertaining to prior to period 1.1.2003 for which the duty was paid by the assesse prior to the period of consideration of final assessment or pre owned by the dealers .
vi) As such vehicle is not eligible for discount was shown in the annex 'A', 'B' and 'C' and accordingly SCN was issued for Rs 33,96,142/-.
vii) Demand was confirmed by O/O no 36 dated 31.3.05fr the said amount and some refunded amount of Rs 38,225/ - was ordered for recovery saying that there is no provision to adjust the amount in C.Ex provisions .Refund can be claimed only under 11B of CEA 1944.
viii) Commissioner (Appeals) upheld the order of revenue and allowed the revenue's appeal on the following grounds.
a) Party is required to file a separate refund application under sec 11 b of the CEA '44.
b) Duty burden has already passed to the customer and it is incorrect to adjust the excess duty short paid even when he was of the view that the duty incidence has been passed to the end user and was required to credited to the welfare Fund.
c) it is settled law in the matter of M/s Sngham Processors (Bhilwara) Ltd Vs Collector, 2000(120)ELT 138(T) held that once the duty burden was passed on to the customer at the time of clearance of goods, issuance of credit notes at subsequent stage would not alter the position.
ix) It is also proved that the discount amount does pertain to the period prior of consideration of final assessment or pre owned cars owned by the dealers.
x) In view of above the appeal of the Appellant shall be rejected. He also relied upon the case laws:-
i. Rajasthan Processors (I) Ltd. Vs. Collector [1994 (70) ELT A182 (S.C.)] ii. Commissioner of Central Excise, Jaipur-II Vs. Adarsh Guar gum Udyog [2000 (120) ELT 138 (Tribunal)] iii. S. Kumars Ltd. Vs. Commissioner of Central Excise, Indore [2003 (153) ELT 217 (Tri.-LB)] iv. Addison and Co. Vs. CCE, Madras [2001 (129) ELT 44 (Mad.)] v. Thermon Heat Tracers Ltd. Vs. CCE, Pune [2001 (132) ELT 455 (Tri.-Mumbai)] vi. Sangam Processors (Bhilwara) Ltd. Vs. Collector of Central Excise, Jaipur [1994 (71) ELT 989 (Tribunal)]
6. On careful consideration of the submissions made by both sides and perusal of records, we find that the issue involved in this case is regarding extending deduction of discount from the assessable value for discharge of duty.
7. Undisputed facts are that appellant herein informed the dealers in advance as to the discounts offered and eligibility thereof; the said scheme was applicable and extended to all the dealers of the appellant; the assessment were provisional on the request of appellant and were taken up for finalisation. Revenues case is that appellant is not eligible to claim the deduction of trade discount which is named as turnover discount and adjustment of duty with short payment of duty of finalisation and extending discount to non performing dealers. Firstly, we find that the impugned order is not sustainable in respect of all the three points; as regards of extending the discount to non performing dealers, the denial of deduction of such discount from the assessable value seems to be incorrect, as there is no reason for disallowing the same. It is an admitted fact that the discount is extended to non performing dealers also and that it has been passed on. We agree with the learned Counsel that by extending such discount it will encourage the dealers to work more efficiently and get orders for cars which will benefit the dealers as well as the appellant.
8. As regards the adjustment of excess payment of duty to short payment of duty on the finalisation of the provisional assessment, we find that in the appellants own case, as reported at [2014 (307) ELT 182 (Tri.-Mum.)] the Tribunal has held that the discount which are extended by credit notes are also eligible for deduction. We find that the Hon'ble High Court of Karnataka in the case of Toyota Kirloskar Auto Parts Pvt. Ltd. (supra) paragraph 8; after reproducing Rule 7of the Central Excise Rules, 2002 held as under.
Rule 7. Provisional assessment. - (1)?Where the assessee is unable to determine the value of excisable goods or determine the rate of duty applicable thereto, he may request the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, in writing giving reasons for payment of duty on provisional basis and the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, may order allowing payment of duty on provisional basis at such rate or on such value as may be specified by him.
(2)?The payment of duty on provisional basis may be allowed, if the assessee executes a bond in the form prescribed by notification by the Board with such surety or security in such amount as the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, deem fit, binding the assessee for payment of difference between the amount of duty as may be finally assessed and the amount of duty provisionally assessed.
(3)?The Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall pass order for final assessment, as soon as may be, after the relevant information, as may be required for finalizing the assessment, is available, but within a period not exceeding six months from the date of the communication of the order issued under sub-rule (1) :
Provided that the period specified in this sub-rule may, on sufficient cause being shown and the reasons to be recorded in writing, be extended by the Commissioner of Central Excise for a further period not exceeding six months and by the Chief Commissioner of Central Excise for such further period as he may deem fit.
(4)?The assessee shall be liable to pay interest on any amount payable to Central Government, consequent to order for final assessment under sub-rule (3), at the rate specified by the Central Government by notification issued under Section 11AA or Section 11AB of the Act from the first day of the month succeeding the month for which such amount is determined, till the date of payment thereof.
(5)?Where the assessee is entitled to a refund consequent to order for final assessment under sub-rule (3), subject to sub-rule (6), there shall be paid an interest on such refund at the rate specified by the Central Government by notification issued under Section 11BB of the Act from the first day of the month succeeding the month for which such refund is determined, till the date of refund.
(6)?Any amount of refund determined under sub-rule (3) shall be credited to the Fund :
Provided that the amount of refund, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to -
(a) the duty of excise paid by the manufacture, if he had not passed on the incidence of such duty to any other person; or
(b) the duty of excise borne by the buyer, if he had not passed on the incidence of such duty to any other person.
8.?Therefore, it is clear that after a final assessment order is passed, if the duty paid in terms of provisional assessment is less than the duty payable after the final assessment, the assessee is liable to pay the interest on the short fall. In the entire scheme of Rule 7, there is no indication that when an assessee is permitted to pay duty in pursuance of a provisional assessment order, if he is dealing with more than one goods, they have to be treated separately. Even though the duty payable under the Act is to be calculated under each head of each case ultimately it is the total duty payable for all the goods which are the subject matter of the provisional assessment and final assessment which is to be taken into consideration. If after taking into consideration the duty payable in respect of all the goods and the duty paid in pursuance of the final assessment order, if still the assessee is due in any duty, then for the short fall in payment of duty, the assessee is liable to pay interest. The said ratio was followed by the Principal Bench of Tribunal in the case of BSNL [2014-TIOL-1410-CESTAT-DEL.]. In view of the authoritative jurisdictional pronouncement, we have to hold that the excess payment of duty to the short payment of duty on finalisation of provisional assessment is to be allowed.
9. As regards the duty liability on the turnover discount extended, it is seen from circular of appellant that this turnover discount specifically states that the said discount is available to all the dealers beginning on the first day of calendar year and ends on the last day of such calendar year. Only reason given by the lower authorities for rejecting the contention that the dealer has not sold the cars manufactured and cleared to him by the appellant of the same calendar year. We find no merits in this argument as the turnover discount is an advancely intimated discount without any qualification as to which cars are to be sold to be eligible for Turnover Discount; the circular only states that to be eligible for Turnover Discount specific number of cars need to be sold in a calendar year. In such a factual position, we are of the view that the deduction claimed by the appellant on the turnover discount is legitimate and needs to be extended to him. We agree with the learned Counsel that the issue is now squarely covered by the decision of Tribunal in the case of Dabur India Ltd., Mark Auto Industries, Rama Vision and Hindustan Lever (supra). In view of the authoritative jurisdictional pronouncement and in the facts and circumstances of this case, we hold that the impugned orders are not sustainable and liable to be set aside.
10. The impugned orders are set aside and the appeals are allowed as indicated herein above.
(Operative portion of the order pronounced in open Court) (C.J. Mathew) (M.V. Ravindran) Member (Technical) Member (Judicial) Sp 2 APPEAL NO. E/1369/05, E/1928 to 1930, 2728/06 & E/180/07