2018 (7) TMI 1935 - AT - Central Excise

Manufacturer wins Central Excise Duty case on discounts passed to customers, Commissioner's disallowance overturned.

M/s National Plywood Industries Ltd. Versus Commissioner of Central Excise, Kolkata-VII.

The Tribunal found in favor of the appellant, a manufacturer of Plywood and Block Boards, in a Central Excise Duty case. The discounts claimed were ... Valuation - allowability of trade discounts - HELD THAT:- The  Hon’ble Supreme Court in M/S. PUROLATOR INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI – III [2015 (8) TMI 1014 - SUPREME COURT] has held that cash and volume discounts stipulated in agreement between assessee and buyers known at or prior to clearance of the goods is to be deducted from sale price in order to arrive at value of excisable goods and that there is no change in the legal position after amendment of Sec.4 of C.Ex Act - the appellant has rightly availed abatement of the discounts involved and the Commissioner has erred in disallowing the same - the demand of duty and interest confirmed and penalties imposed upon the appellant are unsustainable.  Whether the discounts were known to the Department as well as to the buyers before removal of finished goods? - HELD THAT:- It is recorded by the Commissioner himself in the order that the discount and the nature of discounts had been duly disclosed by the appellant to all concerned including the department and the price declarations containing the respective percentage of such discounts, have also been duly filed.  It is also seen that abatements have been claimed by the appellant in respect of each of the discounts - issue decided in favor of appellant. Whether such discounts were actually passed on to customers/buyers - HELD THAT:- From the said invoices/bills we also find that the appellant during the relevant period, had claimed discounts of exactly the quantities thereof passed on to the customers. The finding in the impugned order that the appellant had claimed abatement of ₹ 4,04,77,213.47 which had  not been passed on the customer is therefore unsustainable. Time Limitation - HELD THAT:- Since we have decided the appeal is favor of the appellant on merit, we have not gone into the aspect of limitation.  Appeal allowed - decided in favor of appellant. Issues:1. Whether the discounts were known to the Department and buyers before removal of finished goods.2. Whether the discounts were actually passed on to customers.3. Whether part of the duty demand is barred by limitation.Issue 1: Disclosure of DiscountsThe appellant, a manufacturer of Plywood and Block Boards, claimed various discounts in determining the assessable value for Central Excise Duty. The appellant provided price declarations and details of discounts to the Central Excise authority. The Commissioner acknowledged that discounts were disclosed to all concerned, including the department. The Tribunal found in favor of the appellant on this issue.Issue 2: Passing on DiscountsThe demand for duty was based on invoices/bills submitted by the appellant from their Banganagar branch office. The Tribunal noted that the invoices clearly indicated goods from the Banganagar Unit and that discounts claimed were passed on to customers. Citing legal precedents, including decisions by the Supreme Court and Tribunal, the Tribunal held that the appellant rightfully availed discounts, and the Commissioner erred in disallowing them. Consequently, the duty demand, interest, and penalties imposed were deemed unsustainable.Issue 3: LimitationAs the appeal was decided in favor of the appellant on merit, the Tribunal did not delve into the aspect of limitation. The impugned order was set aside, and the appeal was allowed with consequential relief.This judgment highlights the appellant's entitlement to discounts, the necessity of passing on discounts to customers, and the legal precedents supporting the appellant's position. The Tribunal's detailed analysis and reliance on established legal principles underscore the importance of proper disclosure and passing on of discounts in Central Excise matters.