1996 (8) TMI 255 - AT - Central Excise

Supreme Court upholds validity of turnover discount scheme under protest, allows refund claims

The Supreme Court allowed the appeals by M/s. Bipico Industries (Tools) Pvt. Ltd., holding that the turnover discount scheme, though not declared to the ... Valuation - Refund - Limitation Issues:Admissibility of turnover discount, rejection of refund claims, declaration of discount scheme to the department, limitation period for refund claims, payment of Central Excise duty under protest.Analysis:The case involved four appeals by M/s. Bipico Industries (Tools) Pvt. Ltd. challenging the order-in-appeal related to the admissibility of turnover discount. The appellants announced a turnover discount based on minimum purchases per quarter but did not reflect it in the price lists. The Collector of Central Excise (Appeals) rejected their refund claims as the discount was not declared to the department and some claims were barred by limitation.The Supreme Court clarificatory order in Union of India v. Bombay Tyres International (P) Ltd. stated that trade discounts should be allowed if established under agreements or terms of sale, known at the time of goods' removal. The appellants had mentioned the turnover discount scheme in the price lists under protest, indicating the discount and reserving the right to claim a refund.The Collector's rejection based on the scheme not being known to the department was refuted by the appellants' submission in the price list remarks column. The issue of limitation arose as the prescribed procedure under Rule 233B for payment under protest was not followed. While the turnover discount was known at the time of goods' removal, quantification was done later, making the claim allowable on merits.The Tribunal's ruling in Shri Ram Fibres Ltd. v. CCE emphasized that failure to follow Rule 233B for payment under protest would render the duty paid not treated as under protest. The appellants were entitled to refunds within the normal limitation period of six months, subject to unjust enrichment provisions. Consequently, the order of the Collector of Central Excise (Appeals) was modified, and all four appeals were disposed of accordingly.