Customs, Excise and Gold Tribunal - Mumbai
Aristo Pharmaceuticals Ltd. And ... vs Commissioner Of Central Excise on 18 August, 2003
Equivalent citations: 2004(166)ELT106(TRI-MUMBAI)
ORDER
Gowri Shankar, Member (Technical)
1. Appeals taken up for disposal with the consent of both sides, after waiving deposit.
2. Aristo Pharmaceuticals Ltd. the assesee, is engaged in the manufacture of medicament which it removes on payment of duty from its depots from where they have cleared to the dealers. It is claimed that the assessee was providing discounts to its customers from the list price and determines the assessable value of the medicament by deducting from the list price sums work to this discount transport and other charges. Notice issued to the appellant proposed to deny these deductions on the ground that these discounts had actually not been passed on and that the assessee also recovered the transport charges from its customers. Adjudicating on the notice, the Commissioner has confirmed the demand and imposed penalty equal to the duty and also imposed a penalty on Ratnakar Sonawane, its authorised signatory.
3. The basis for the proposals in the notices is the declaration filed on 1.2.1999 by the assessee. In this declaration, filed under Sub-rule (3) of Rule 173C for February 1999, the assessee has, in reply to a question, stated that it had no system of giving trade discount over the declared/published prices to the wholesale dealer or buyer depending upon the volume of sale etc and N.A to another question relating to uniformity of discount The assessee had also stated that equalised freight has been recovered from the customers.
4. In reply to the notice, the assessee had contended that the statement made in this declaration of February 1999 in regard to discount was erroneous and that, in the price declaration filed by it on 19.3.1998, it had indicated deduction on account of transport charges and on account of discount. It had also referred to some invoice numbers and circulars in support of the claim that discount was being passed on. The Commissioner however has not accepted this submission. He has said that, apart from the declaration filed by it in February 1999, the assessee had not filed any declaration showing payment of discount and that there was therefore no passing on any fresh discount. As to freight, he had said that it was not eligible for deduction, in the absence of a contract between buyer and seller to this effect and the sale has taken place at the factory gate and not the premises of the buyer.
5. We will first deal with the deduction on account of discount. A copy of declaration dated 19.3.1999 is seen to have been received on the same day, as seen from the signature on it. It is contended that it is the signature of an officer in the range office having jurisdiction over the appellant. The same claim has been made before the Commissioner. The Commissioner ought to have verified to find out whether such a declaration in fact had been filed by the assessee and received by the range office. His dismissal of the claim without even such a verification cannot be sustained. The assessee would have no other means of establishing that the document has been received by the concerned range office and it was simple enough for the Commissioner to verify the matter. If that is the case, there would be justification for saying that the statement made in the declaration of February 1999 was an error.
6. If in fact evidence existed that there was a pattern of discount which was passed on to the customers and such discounts are eligible for deduction in accordance with law, the mere fact that the assessee had made a wrong statement should not be held against him. After all, if an assessee makes a wrong statement that it is not passing on discount and the records show that it was, the mere declaration cannot be used to say that the discount can be denied. It is the fact of passing or not that should decide the matter. On the face of it, there is a case for going into this aspect. The Commissioner in any case should have done since this was the contention in the reply.
7. As to the freight there is no material produced before us whatsoever which would enable us (to determine whether the title to the goods passed on) to determine at what point the assessee passed on this discount to the customers. There would be no justification claiming it as deduction, in the light of the amendment made to Clause (b) of Sub-section (4) of Section 4 of the Act in relation to the scope of the term "place of removal." If, on the other hand, the title to the goods is passed on at the depot, such charges would not be included. While we have no material before us even prima facie to accept the assessee's contention that the title to the goods passed at the depot, there is equally no material advanced by the Commissioner to say that it passed on at the customers' premises. In this situation, and taking note of the contention of the representative of the assessee, that he will be able to substantiate before the Commissioner its claim that title to the goods passed on at the depot, we think that this matter should also be examined by the Commissioner.
8. The other appeal is against the penalty imposed on Ratnakar Sonawane, the authorised signatory of the appellant on the ground that duty has been evaded. The liability to penalty upon Sonawane and on the assessee will depend upon its first being established that there had been short payment of duty.
9. The appeals are accordingly allowed, the impugned order set aside and the matter is remanded to the Commissioner, who shall, after considering the submissions and materials that the representative of the appellant promises to produce within a month from the receipt of this order, and considering that the materials that the department may produce, pass orders on the eligibility of both the issues in accordance with law.