2014 (3) TMI 671 - HC - Central Excise

Court rules in favor of assessee, overturns revenue's decision, highlighting errors in Tribunal's judgment

The AP. Paper Mills Limited Versus The Commossioner of Central Excise, Visakhapatnam

The court allowed the appeals, ruling against the revenue and in favor of the assessee. It emphasized the validity of the issues raised by the appellant, ... Entitlement for refund of excise duty - Unjust Enrichment - Whether assessee is entitled for refund of duty on account of the discounts allowed to the dealers subsequent to the time of removal of the goods – Whether Tribunal was right in rejecting the appeal in view of Section 11-C ignoring decision of the High Court of Madras on Section 11-B and 12-B - Held that:- Judgment in ADDISON AND CO. v. COMMISSIONER [2000 (11) TMI 146 - HIGH COURT OF JUDICATURE AT MADRAS] followed - while dealing with the matters arising u/s 35-G the High Court is bound to accept the findings of fact recorded by the Tribunal - The orders of the primary and first appellate authorities have merged with the orders of the Tribunal and the Tribunal by itself did not disturb any of the findings of fact as recorded by the authorities below - both the authorities, primary as well as the appellate, had categorically recorded that the Assessee had made over the excise duty component, which was collected originally on revision of the invoice price, in the process of allowing discounts. Trade practice of allowing quantitative discounts and the aspect of adjustment of the excise duty in conformity with the discounts are allowed - The principle of taking the value for the purpose of determining tax as the transaction value of the goods, as reflected in the invoice price at the time of delivery of goods to the buyer is established- the appropriate provision applicable are the proviso (d) to Section 11-B (2) - Section 12 is relevant when the party who is liable to pay excise duty on any goods, has to file the sales invoice and other documents relating to assessment at the time of clearance of the goods itself - all the appeals are allowed – Miscellaneous petitions pending, if any, stands closed - Decided in favour of assessee. Issues Involved:a. Whether the Appellate Tribunal was right in dismissing the appeal of the appellant when the decision of the 1st appellate authority was passed based on the judgment of the Tribunal reported in M/S ADDISON & CO. LTD., vs. CCE, MADRAS 1997(93)ELT 429, which has been subsequently reversed in favour of the assessee by the High Court of Madras in ADDISON AND CO. v. COMMISSIONER 2001 (129) E.L.T. 44 (Mad.).b. Whether the Tribunal was right in rejecting the appeal of the appellant by relying on the decision rendered in the context of Section 11-C of the Act ignoring a direct decision of the High Court of Madras on the interpretation of provision of Section 11-B and 12-B, which are involved in this appeal.c. Whether the Tribunal was right in dismissing the appeal of the appellant ignoring a direct judgment of the Hon'ble Supreme Court reported in ADDISON & CO. LTD., MADRAS vs. COLLECTOR OF CENTRAL EXCISE, MADRAS 1997(91)ELT 532 (SC), wherein it was held that the manufacturer is entitled for refund of duty on account of the discounts allowed to the dealers subsequent to the time of removal of the goods.d. Whether the Tribunal was right in following the decision in which the relevant provisions have not been considered and decided in preference to a decision wherein the very same provisions have been considered and answered by a High Court.Detailed Analysis:Issue a:The appellant argued that the first appellate authority committed an error by relying on the CESTAT decision in M/s Addison & Co. Ltd. v. CCE, Madras (1997(93)ELT 429), which was later reversed by the High Court of Madras in Addison & Co. v. Commissioner (2001 (129) E.L.T. 44 (Mad.)). The Tribunal failed to notice this reversal, leading to an erroneous dismissal of the appeal. The court agreed with the appellant, noting that the Tribunal should have considered the High Court's reversal, which favored the assessee.Issue b:The appellant contended that the Tribunal erred by relying on decisions under Section 11-C of the Act, ignoring the direct decision of the High Court of Madras on Sections 11-B and 12-B. The court found that the case of Sangam Processors (Bhilwara) Ltd. v. Collector of C.Excise, Jaipur 1994(71)E.L.T. 989, which dealt with Section 11-C, was not applicable. The appropriate provision for the present case was the proviso (d) to sub-section (2) of Section 11-B.Issue c:The appellant cited the Supreme Court judgment in Addison & Co. Ltd. Madras vs. Collector of Central Excise, Madras (1997(91)ELT 532 (SC)), which recognized the practice of allowing quantitative discounts and adjusting excise duty accordingly. The court agreed, noting that the Tribunal's reliance on irrelevant cases like Sangam Processors and Grasim Industries was erroneous. The Supreme Court's recognition of trade practices should have been considered.Issue d:The appellant argued that the Tribunal's preference for decisions that did not consider the relevant provisions over those that did was incorrect. The court noted that the Tribunal ignored the Madras High Court's judgment in Addison & Co. v. Commissioner (2001 (129) E.L.T. 44 (Mad.)) without proper justification. The court found this approach unacceptable and emphasized the need to follow decisions that directly address the relevant provisions.Conclusion:The court concluded that the issues raised by the appellant were valid. The appeals were allowed, answering the questions in the negative, i.e., against the revenue and in favor of the assessee. The court emphasized that the findings of fact recorded by the authorities below were not disturbed by the Tribunal and should be accepted. The judgment of the Madras High Court in Addison & Co. v. Commissioner (2001 (129) E.L.T. 44 (Mad.)) was deemed applicable, and the Tribunal's order was not approved. The appeals were disposed of by a common order, and no costs were imposed.