Custom, Excise & Service Tax Tribunal
M/S. Rewa Fans Industries vs Commissioner Of Central Excise on 28 July, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI PRINCIPAL BENCH, COURT NO. II Excise Appeal No. 1928 -1929 of 2006 [Arising out of Order-In-Original No. 35-39/ CE/BPL/2006 dated 25.1.2006 passed by Commissioner of Central Excise (Appeals), Bhopal] For approval and signature: Honble Mr Ashok Jindal, Member (Judicial) Hon'ble Mr. B Ravichandran , 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? 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? 4 Whether Order is to be circulated to the Departmental authorities? M/s. Rewa Fans Industries Appellants M/s. Ravi Marketing (P) Ltd. Vs Commissioner of Central Excise Respondent
Bhopal Appearance:
Shri Rahul Tangra, CA for the appellant Shri M S Negi, AR for the assessee CORAM:
Hon'ble Shri Ashok Jindal, Member (Judicial) Hon'ble Mr. B Ravichandran, Member (Technical) Date of Hearing /decision: 28.7.2015 FINAL ORDER NO. A/ 52413-52414/2015-EX(DB) Per Ashok Jindal :
The appellant M/s. Rewa Fans Industries (hereinafter referred to as RFI) is in appeal against the impugned order for setting aside the demand of duty confirmed against them and imposing penalty and M/s. Ravi Marketing Pvt. Ltd. (hereinafter referred as RMPL) is in appeal against the impugned order imposing penalty of Rs.25,000/- under Rule 209 A of the Central Excise Rules, 1944.
2. The facts of the case are that M/s. RFI are the manufacturer of fans and during the period January 1986 to August, 1987, 95% of their production was sold to their selling distributor i.e. M/s. P D Vyas & Co. (in short PDV). Some remaining sales were effected by the appellant direct to the customers through M/s. PDV for which certain commissions were given to M/s. PDV. The commission given to M/s. PDV was deducted from the assessable value. Revenue is of the view that commission given to M/s. PDV is includable in the assessable value and the amount of discounts given to M/s. PDV being sold to sole distributor is also includible in the assessable value during the period January, 1986 to August, 1987.
3. During the period September, 1987 to November, 1988, M/s. RFI was clearing 95% of their goods through their sister concern namely Shri Bajarang Enterprises (in short SBE) who in turn sold the fans to M/s. RMPL who further sold them to M/s. PDV. Certain supplies were made directly by the appellants at the instance of M/s. PDV. The appellant discharged duty on the price charged to SBE.
4. In these set of facts, a show cause notice was issued to the appellants alleging that M/s. PDV acted as appellants commission agent, therefore the assessable value will be the price at which M/s. PDV sold the fans to whole seller. For determination of the assessable value, the goods cleared through M/s. SBE, thus, alleged to be dummy entrepreneur as they are related parties. Therefore, it was alleged that appellants has under valued the goods and not paid the correct duty. The show cause notice was adjudicated. Demands were confirmed. The said order was challenged before this Tribunal and this Tribunal vide order dated 27.3.1988 remanded the matter back to the adjudicating authority on the ground that appellant has not been granted personal hearing on account of non production of RUD on time and it was observed by this Tribunal that there is inconsistency in the show cause notice as well as in the impugned order wherein it was observed that 95% of the fans were sold to M/s. PDV and also M/s. PDV was commission agent to the appellant. It was observed by this Tribunal that these two assertions cannot be simultaneously possible. Thereafter, the impugned orders have been passed wherein the demands proposed in the show cause notice were confirmed. On appeal before learned Commissioner (Appeals), he held that the adjudicating authority has misread the contract and has erred in coming to the conclusion that M/s. PDV was commission agent of the appellant. Therefore, he held that whatever goods sold by the appellants to M/s. PDV as sole distributor, the price charged after discount is the assessable value but for the goods directly sold to the buyers and wherein commission was paid to M/s. PDV, learned Commissioner (Appeals) has held that price at which the goods were sold directly to the consumer is the assessable value. Therefore, the appellant being aggrieved by that order, is in appeal before us.
5. Learned Counsel for the appellant submits that for the period prior to 1.7.2000, there was no concept of transaction value. During that period, the price at which the goods were generally sold is the assessable value and it is admitted fact that 95% of the production was sold to M/s. PDV as sole distributor at a certain price. Therefore, the price at which the goods have been sold to M/s. PDV is the assessable value. In that circumstances, the demand pertained to January, 1986 to August, 1987 is required to be set aside. To support this contention, he relied on the decision of Honble Apex Court in the case of Elgi Equipments Ltd. vs. CCE, Coimbatore [2007 (215) ELT 348 (SC)] . 6. For clearance during the period September, 1987 to November, 1988, he submits that the price at which goods were sold through M/s. SBE and M/s. RMPL to M/s. PDV, the price at which M/s. RMPL sold the goods, is the assessable value and they have paid duty thereon on realization that as M/s. RMPL is the related person therefore, the goods at which RMPL sold the goods to M/s. PDV should be the assessable value. In these circumstances, he prayed that the appeal be allowed. For imposition of penalty on M/s. RMPL, he submits that in the impugned order, the penalty could have been imposed on real person and not on artificial person, therefore, the penalty is not imposable.
7. On the other hand, learned AR reiterated the finding of the impugned order.
8. Heard the parties. Considered the submissions.
9. In this case, the short issue arose from the facts of the case is that for the period prior to 1.7.2000 when the price on which the goods are generally sold is the correct assessable value or not. The said issue came up before the Honble Apex Court in the case of Elgi Equipments Ltd. (supra) wherein Honble Apex Court has observed as under:
10.?At the outset, it may be stated that in this case, we are concerned with the law as it stood before 2000. At that time, assessable value was equated to normal price which was the wholesale price at the factory gate. The word ordinarily in Section 4(1)(a) indicated that if the sale pattern adopted by an assessee indicated that a large part of the total production was sold at wholesale price at the factory gate and that the assessee had given the benefit of trade discount to large number of its dealers at a particular rate, then, it would constitute normal practice of the wholesale trade in which event the assessee would be entitled to trade discount across the board. Once the assessee proves that 20% (as in this case) was the normal practice of the trade, then Department cannot refuse it on the ground that some dealers got the discount at 8%.
11.?Applying the above test to the facts of the present case, we find that as a general rule in this case, the assessee has given the benefit of trade discount of 20% to majority of its dealers; that in fact they have given discount at 12% to big dealers where they gave discount of 8% to small dealers, and, therefore, the assessee was entitled to trade discount of 20% in all cases.
10. As the issue has been settled by Honble Apex Court in the decision of Elgi Equipments Ltd. (supra), therefore we hold that price at which goods have been ultimately sold to M/s. PDV shall be the assessable value. In these terms, demands for the period January, 1986 to August, 1987 as confirmed by way of impugned order is set aside. Further, we hold that for the period September, 1987 to November, 1988, the price at which the M/s. RMPL sold the goods to M/s. PDV is the assessable value. In these terms, we have decided the assessable value. As there were no malafide on the part of M/s. RFI for short payment of duty, the penalty is not imposable.
11. We further find that in this case, penalty of Rs. 25,000/- has been imposed on M/s. RMPL. As M/s. RMPL is an artificial person and in the facts of circumstances of the case, malafides against M/s. RMPL are not stand proved as they have conceded that the price at which M/s. RMPL sold the goods to M/s. PDV is the correct assessable value.
12. In these circumstances, we set aside the penalty imposed on M/s. RMPL. With these observations, the appeals are disposed of in the above terms.
( operative part of the order pronounced in the open court )
( Ashok Jindal ) Member(Judicial)
( B Ravichandran )
Member(Technical)
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