TaxTMI 
TaxTMI 
2009 (8) TMI 453
X X X X Extracts X X X X
X X X X Extracts X X X X
....the impugned order, the Commissioner (Appeals) has disallowed the deductions claimed by the appellants on account of incentive scheme discount, average cash/prompt payment discount, advance payment discount and freight. The impugned order has been passed after matter had been remanded by the Tribunal to the original adjudicating authority on the plea made by the appellant that even though they have been asked to get chartered accountant's certificate before they could get the same and produce before the Deputy Commissioner/Assistant Commissioner, he had adjudicated the case and passed the order. The Tribunal had directed the Assistant Commissioner to examine the issue afresh after taking into consideration the certificate of cost accountant and to pass an order accordingly on providing an opportunity to the appellants. 2. We have heard both sides at length and have considered the records available. 3.1 As regards cash discount, it was submitted on behalf of the appellants that the cash discount is allowed when documents are negotiated through banks and payment is made within stipulated period. They had issued circular in this regard extending cash discount. The ground taken by th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....they could not issue a certificate about advance payment since books of accounts and invoices for the year were not provided to them. On this ground, he has denied the discount claimed for all the years involved. He has also taken a view that advance payment discount cannot be allowed since when advance is made, the prices are reduced and such reduction will form part of the assessable value. Coming to incentive/special discounts claimed for deduction has been rejected on the ground that there is no uniform criteria and these discounts are allowed on the basis of negotiation and negotiation pushed the entire scheme under cloud. Advance payment discount has also been disallowed that the entire amount of advance received by them was directly deducted from the invoices and actually no discount was passed on to their customers. 3.3 We find from the show cause notice that the claim for several deductions was proposed to be disallowed mainly on the ground that other discounts were not passed on to the customers and expenditure shown as incurred by the related parties were never incurred and were not passed on actual customers and purchases were only manipulated and fabricated. Whereas t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r intermediary related persons who were the first buyers from the manufacturers and who had sold the same thereafter to RML was not included. In second set of figures, he had included the freight expenses incurred by these related intermediaries also. There is no dispute that these intermediaries between RML and the manufacturers were dummy. There are two issues. The data for allowing deduction relating to freight should be as furnished by the Assistant Director (Cost) or as furnished by the chartered accountant in respect of the appellants and whether the freight expenses incurred by the intermediaries should be included. 4.2 The Assistant Director (Cost) had given a report initially in 1995 and after that the appellants took objection to certain points, he withdrew that report and submitted another report on 17-12-1995 and it is this report which has been relied upon by the Commissioner (Appeals) in the impugned order. However, the appellants were asked to submit chartered accountant report in respect of deductions claimed by them and also cost of production by the Assistant Director (Cost) before adjudication. But by the time, chartered accountant report was submitted the AC ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t of which the appellants had filed price list in part-IV. The benefit cannot be extended to other intermediary companies of which the department had no knowledge. The Commissioner (Appeals) has not discussed the issue elaborately. As submitted by the appellants before us in the report that fans are first sold to the related intermediary persons and these related intermediary persons have sold the fans to RML thereafter. Selling price declared by the RML has to necessarily include expenses incurred by the related intermediary persons also. However, section 4 as it existed during the relevant time required value to be arrived at the factory gate in the normal course of wholesale trade. Therefore all expenses incurred towards freight after the goods are cleared from the factory gate have to be deducted if we have to arrive at the factory gate price. Therefore, we are unable to agree with the Commissioner (Appeals) that expenses towards freight incurred by the related intermediary persons cannot be included in the assessable value unless it is shown that expenses were not incurred or not genuine or there was a flow back. We also take note of the fact that even the Assistant Director (....