TaxTMI 
TaxTMI 
2014 (6) TMI 162
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....ealers during the period April, 2006 to July, 2008. 2.2 Indica cars are smaller compared to Indigo cars and at the relevant time, they carried lower a rate of duty, compared to Indigo cars and utility vehicles. TML sold one car under one invoice and invoices in the relevant period stated that the transaction value was arrived at as per Section 4(1)(a) of the Central Excise Act, 1944. 2.3 In August, 2009, an information was received by the DGCEI, Pune that TML had evaded central Excise duty by reducing the assessable value of Indigo cars (except Indigo CS Model) in the guise of 'Special discount'. Based on this information, investigation was conducted by the officers of DGCEI. 2.4 In the course of investigation, it was found that TML had devised a scheme called Monthly Car targets and schemes. These schemes are linked with dealers' achievement of monthly retail sales and monthly off-take targets. Once the dealers achieve the off-take and retail sale targets, they become entitled to certain incentives. These schemes were in the nature of providing accessories, loan with soft interest rates, free extended warranty, or free insurance cover provided for the vehicles....
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....h & South Jan 2, 2008 Sub: Incentive Structure for the month of Jan'08 We are pleased to inform the incentives Structures for the month of Jan'08 All Utility vehicles - Rs. 85,000 All Indica/Indigo CS - Rs. 0 All, Indigo, Man Kindly inform the dealers of the scheme for the month. Regards S.G. Saksena Nitin Seth (Head-UV Product Group) (Head-Car Product Group) CC: Mr. S. Krishnan - Vice President. 2.7 In his subsequent statement dt. 18.03.2010, Shri S. Krishnan had also, inter alia, admitted that the figures of special discounts offered to the dealers (i.e. Rs.30,000/-, Rs. 45,000/- and Rs. 1,00,000/-) were arbitrarily arrived to pass on the total incentives to the dealers by reducing the transaction value of Indigo Cars. He also stated that the dealers were not concerned with the method of payment as long as they received the incentives. 2.8 Statements of the following authorized dealers of TML were also recorded. (i) Shri S.C. Vartak, Vice President, M/s. Pandit Automotive Pvt. Ltd., Pune (ii) Shri Suraj Dada, Managing Director of M/s. Dada Motors pvt. ....
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.... purchase of Indigo Cars (except Indigo CS Model) from the factory of TML. (v) As per the Car Target Schemes, the dealer gave various discounts to the retail customers, part of which is compensated by TML. Further, TML also gave incentives to the dealers on the Off-take Targets being achieved by him on purchases from the factory of TML. (vi) As per the Car Target Schemes, the amounts in both the cases were different for different brands of Cars, such as Indica, Indigo, Indigo CS etc. (vii) Based on the performance of the dealers in the previous months vis-à-vis the Car Target Scheme, the Regional Offices worked out the incentive amounts payable by TML to the dealer in respect of each brand of Cars i.e. Indigo and Indica Cars. (viii) The Regional sales Offices relayed this information to their Sales Headquarters in the beginning of the month. The Sales Headquarters, in turn, conveyed this to their Sales-Finance Office at Thane to load the amount of incentives payable to each dealer in the System as discounts on the sale of Indigo Cars & Utility Vehicles only in the subsequent months from t....
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....ttlement of the old claims of the dealers. During the investigation, it was also noticed from the Books of Accounts of M/s. Pandit Automotive Pvt. Ltd., one of the authorized dealers of TML that the incentive amount had been shown as 'receivables' from TML. 2.14 After completion of investigation, a show-cause notice dtd. 6/5/2011 was issued to TML demanding a total Central Excise duty of Rs. 59,00,94,013/- (including NCCD, Automobile Cess, Education Cess, Secondary & Higher Education Cess) for the period April, 2006 to July, 2008, besides interest payable thereon apart from proposing to impose penalties under Section 11AC of the Central Excise Act, 1944 and under Rule 25 of the Central Excise Rules,2002, The notice also proposed to appropriate the amounts of Central Excise duty of Rs. 13,65,04,371/- interest of Rs. 5,97,29,128/- and penalty of Rs. 3,41,26,093/- paid during the investigation. The notice also proposed imposition of penalties on Shri Krishnan, the then Vice President-Passenger Car, Shri Rajesh Bagga, Vice President-Legal and Shri Nitin Seth, General Manager Car Product Group of TML under Rule 26 of the Central Excise Rules, 2002 for their various acts of om....
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....s. Effectively, there is reduction in the sale price of cars on account of consumer schemes. Hence the discount given is clearly eligible for deduction from the assessable value. 3.5 In the case of CCE vs. Gujarat Bottling Co. - 1998 (99) ELT 330 (T), the assessee gave discount to the wholesaler depending on the criteria of to whom the goods are subsequently sold by the wholesaler. The contention of the department was that the assessee gave higher discount on the goods sold to the wholesaler when the wholesaler subsequently sold the goods to Government or Railway canteen and gave less amount of discount when the goods were sold by the wholesaler to a person other than Government or Railway canteen. The Hon'ble Tribunal rejected this contention of the department and allowed the discount even when the discount was linked to sales made by the wholesaler to the consumer. 3.6 In the case of Perfect Victor Circle Vs. CCE- Order dated 25.6.1998, the assessee had sold parts of automobile to the wholesaler. The wholesaler had in turn sold these parts to the garage owner or mechanics. In the packing of parts of the vehicle, the assessee had put a coin in every pack. The assesse had....
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....et is certainly in the nature of quantity discount. The quantity discount is clearly eligible for deduction from the assessable value. The scheme of quantity discount was made known to the dealers prior to the removal of goods. Hence, the quantity discount is eligible for deduction from the assessable value. 3.9 In the case of GOI Vs. Madras Rubber Factory- 1995 (77) ELT 433 (SC), the quantity discount and year end bonus discount were held eligible for deduction from the assessable value. The Hon'ble court held that if a discount is known and understood at the time of removal of the goods, through it is quantified later, the same is allowable. 3.10 In the case of Addison & CO. Ltd. Vs. CCE - 1997 (91) ELT 532 (SC), the assessee gave turnover discount which was provided as an incentive for the dealer to lift higher and higher volume of goods, the rate of discount increasing with the rise in the volume of purchases. The rate of turnover discount varied from region to region, product to product within the same region and also on the volume of turnover achieved by each dealer. The Hon'ble Supreme Court held that though the discount was given ad hoc on the basis of the pre....
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.... case of UOI Vs. Bombay Tyre International - 1984 (17) ELT 329 (SC) had held that discounts allowed to be deducted from the sale price having regard to the nature of the goods, if established under agreements or under the terms of sale or by established practice, the allowance and the nature of the discount being known at or prior to the removal of the goods. Such Trade Discounts shall not be disallowed only because they are not payable at the time of each invoice or deducted from the invoice price. In the present case, the discount scheme was known to the customer much prior to the removal of goods and therefore the discount is eligible for deduction. 3.15 The definition of transaction value under Section 4(3)(d) provides the "actual" price or payable. In the present case, the actual price paid or payable by the dealer for the sale of car is the net price mentioned in the invoice. There is no other consideration which is flowing from the dealer to the appellants in connection which is flowing from the dealer to the appellants in connection with the sale of cars. The department has also not invoked Rule 6 of Central Excise Valuation Rules, 2000. There is no dispute on this fact.....
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....the marketing department of the appellants prescribes the qualifying criteria for the eligibility to the discount. The incentive schemes are issued every month. The incentive schemes issued by the appellants do not provide that the discount, for which dealer is entitled, is to be given in the same month in which the scheme has been issued. In other words, the discount entitlement is computed based on the qualifying criteria mentioned in the scheme for the month in which the scheme is issued but the discount earned has been passed on in the subsequent months. The scheme does not provide that the discount earned based on the scheme is for the goods sold in the month for which the scheme is issued. The impugned Order-in-Original has incorrectly held that he appellants had given discount in the sale made in the subsequent month whereas the discount was pertaining to sale made in the previous month. 3.21 The appellants sell vehicles to the dealers and the transactions of sale and purchase between the appellants and dealer are continuous in nature. In other words, the transaction between the appellant and dealer is not one time transaction. Therefore, the discount of the month, let us....
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....bunal held that assessee failed to follow CBEC's Excise Manual of Supplementary Instructions regarding disclosing intention of allowing the discount and request the department for provisional assessment, was immaterial as the nature of discount was known at time of clearance of goods. In the present case also, the deduction of discount has been denied to the appellants on the ground that the appellants have not followed the procedure for provisional assessment. The impugned Order-in-Original admittedly held that the deduction of discount is available if the appellants would have followed the procedure of provisional assessment. In view of the above decision, the denial of deduction for not following the procedure of provisional assessment is incorrect. 3.25 The Commissioner in the impugned Order-in-Original has held that the discount is settlement of past dues for the following reasons: i) The dealer has shown the discount in his books as amounts receivable from the appellants; ii) The amount of discount given in the invoices represent, the amount due from the dealer, the amount due to the dealer, recovery towards advertisement cos....
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.... the nature of the documents from the purported intention by going behind the document or to consider the substance of the matter or to accept it in part and reject it in part or to re-write the document merely to suit the purposes of revenue. The Hon'ble High Court further held that where statutorily the parties have to reduce a certain transaction into writing, which transaction can only be evidenced in writing, it is not open to courts or any other authority to permit oral evidence to be adduced by the parties or to entitle them to go behind the statements made in the document. The aforesaid judgment has been affirmed by the Hon'ble Supreme Court reported at (1967) 66 ITR 692 (SC). The Hon'ble Gauhati High Court in the case of Bhattacharjee Brothers Vs. Supdt. of Taxes, Dibrugarh - 1986 STC 63 (346) held that where there is written contract between the parties, the issue should be decided based on the contract only. The oral statement of the director in this regard is not relevant and cannot be relied upon. 3.28 The Commissioner in the impugned Order-in-Original has held that appellants have included the discount pertaining to Palio car, which is a traded item, wh....
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....001 and vide letter dated 10.1.2003 categorically informed to the department that they would be passing the discounts computed for the FY 2000-2001 in the sales made in the FY 2001-02. Similarly, the discount computed for the period 2001-02 would be given in the sales made in the FY 2002-03. The appellants had also informed the calculation sheet showing how the discount is computed. The department never objected to these letters. This is the precise objection raised by the department in the present case that the discount pertaining to previous month cannot be given in the sale made in the subsequent month. Hence, there is no suppression on the part of the appellants when specific intimation was given to the department. After 2003, similar intimation could not be given by the appellants for the reason that their sale and finance department was shifted from Pune to Thane. In any circumstances, the department cannot ignore letters given by the appellants to the department in 2001 and 2003 on the ground that subsequent to 2003 no letter was given. 3.31 The Commissioner has held that the scheme prevailing in 2001 and 2003 was different from the scheme prevailing in the present case. ....
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....asking for the documents and the nomenclature of the documents used by the appellants in day to day business. The Commissioner has held that the incentive structure circulars issued by the marketing department to the Regional Managers are fabricated documents. The appellants submit that the discount has been passed on in the invoices based on these Circulars only. The amount mentioned in the Circular has only been passed on to the dealer. There is no dispute on the fact and hence the finding that such Circular is fabricated has no basis. The Second document which has been alleged to be false is the documents submitted by Mr. Suhas Kulkarni. The appellants submit that the said documents are not false. The appellants submits that whatever amount of discount mentioned in the document submitted by Mr. Kulkarni has actually been passed on to the dealers. Hence, the allegation of submitting false documents is factually incorrect. The finding of submitting false evidences is also based on the fact that some of the officials of the appellants have denied of having seen any particular document such as incentive structure circular etc. However, the said official who denied of having seen the....
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....s which is incorrect. In any case, the discount amount mentioned in the invoice issued to the dealer is the same as mentioned in the alleged Circular. Hence, the finding that the said Circular are false or fabricated is incorrect. 3.37 The appellants had appointed Chief Internal Auditor which is the higher Ethical officer of the noticee' company to examine the documents submitted by the officials of the appellants during the course of investigation. The Chief Internal Auditor had given a report dated 7.12.2009. In the report, it has been stated that he had examined all the documents submitted by the officials of the appellants. He has also conducted a meeting of all the concerned officials of the appellants. Chief Internal Auditor has examined each and every documents and authenticity of the documents. After examining all the facts, the Chief Internal Auditor has stated that he documents submitted by the officials are part of the process of giving discount by the appellants to dealers. 3.38 The appellants vide letter dated 20.4.2011 submitted a Circular dated 2.6.2008 issued to all the eastern Region dealers mentioning the Scheme for the month of June 2008. The Circular d....
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....d. Sr. Counsel for the appellants made it clear at the hearing that the appellant is neither challenging nor seeking refund of the amounts of Central Excise duty of Rs. 13,65,04,371/- interest of Rs. 5,97,29,128/- and penalty of Rs. 3,41,26,093/- already paid during the investigation. These sums are, therefore, required to be confirmed. 4.2 As a measure of sales promotion and marketing policy, TML issues Car Targets and Schemes to its dealers on a monthly basis. These Car Targets and Schemes specify the quantum of retail sales to the retail customers and the number of Cars of various brands to be lifted by the dealers from TML during a particular month called Off-Take Target. These schemes contain various incentives to be given to the retail customers by the dealers in respect of each brand of Car. The incentives include, inter-alia, cash discount, soft loan with low interest rate, free gift, extended warranty, etc. In the process, the dealers incur certain expenses in granting such incentives to retail customers. However, to compensate the burden of such expenses, TML bears major portion of the burden. Therefore, the Car Target Scheme specifies the extent of TML's contribut....
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....moval of the goods. There is no agreement between the dealers and TML permitting such discount from the transaction value. In its clarificatory order in the case of Union of India & Ors. Vs. Bombay Tyres International Pvt. Ltd. - 1984 (17) ELT 329 (S.C.), the Hon'ble Apex Court has held that discounts allowed in the Trade (by whatever name such discount is described) should be allowed to be deducted from the sale price having regard to the nature of the goods, if established under agreement or under terms of sale or by established practice, the allowance and the nature of discount being known at or prior to removal of the goods. Such Trade Discounts shall not be disallowed only because they are not payable at the time of each invoice or deducted from the invoice price. In the present case, there is no agreement between TML and its dealers allowing discount from the sale price of the goods. Terms of sale also do not provide for such discount from the sale price of the goods. There is also no established practice allowing such discount. Moreover, the nature of so-called 'special discount' is also known at or prior to the removal of the goods. Therefore, the Commissioner h....
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.... relevant for the determination of value of goods for the purpose of payment of duty by the manufacturer. Since the goods were already sold and marketed by the manufacturer, Excise is concerned with the first entry into the stream of wholesale trade. Excise is not concerned with what happens to the goods thereafter. TML in the sale invoices for the relevant period for sale of Indigo cars and Utility Vehicles for which demand has been made has mentioned that the transaction value is arrived at in terms of Section 4(1)(a) of the Central Excise Act, 1944. 4.8 Section 4 (1)(a) of the Central Excise Act, 1944 envisages the method of collection of tax at the point of first sale effected by the manufacturer. It is the first immediate contact between the manufacturer and the trade that is made decisive for determining the transaction value. It is the measure of value of goods for the purpose of Excise. Any activity undertaken by the dealer is not relevant for the purpose of Excise since the goods have already been sold and marketed to the dealer. This would violate the true nature of Excise duty and also the concept of factory gate sale which is the basis for determination of value of g....
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....'special discount'. He was also responsible for fabrication of discount circulars addressed tot eh Regional Managers, West, East, South, North. He has also admitted in his statement dtd. 18/3/2010 that he was aware that Indigo Cars & Utility Vehicles carried higher rate of duty compared to Indica Cars. Therefore, the Commissioner has rightly imposed penalty on him under Rule 26 of the Central Excise Rules, 2002. 4.12 Shri Nitin Seth, General Manager (Car Product Group). He was the person who implemented the policy formulated by Shri S. Krishnan. He was the person who signed the fabricated discount circulars shown to have been issued to the Regional Managers & to all Car Dealers. His action cannot, therefore, be said to be innocent. Having regard to all these facts, imposition of penalty on him under Rule 26 is quite just and fair. 4.13 Shri Rajesh Bagga, Legal Head, though not in employment during the relevant period, was guilty of supporting the stand taken by the appellant that reduction of assessable value of Indigo Cars under the guise of special discount was to encourage the sale of Indigo Cars. Therefore, he cannot escape from the liability to penalty under Rule....
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....le to ad valorem duties. The relevant extracts of the said section 4 is reproduced below: "Section 4 - Valuation of Excisable goods for purposes of charging of duty of excise.- (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to their value, then, on each removal of the goods, such value shall. a. in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, be the transaction value; b. in any other case, including the case where the goods are not sold, be the value determined in such manner as may be prescribed. Explanation. - For the removal of doubts, it is hereby declared that the price-cum-duty of the excisable goods sold by the assessee shall be the price actually paid to him for the goods sold and the money value of the additional consideration, if any, flowing directly or indirectly from the buyer to the assessee in connection with the sale of such goods, and such price-....
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....removal of the goods. Therefore, if the valuation has to be done in respect of Indica cars which are removed and on which discounts are being offered on sale, the benefit of such reduction has to be made by reducing the price of Indica cars and determination of value has to be made for each removal of Indica cars. It is an admitted fact in the case before us that this has not been done. The price reduction has been effected not on the goods to which it applies but by reducing the price of some other goods (other models of cars) which were cleared at a subsequent point of time. Thus the provisions of section 4 have not been adhered to or complies with on the transactions with which we are concerned with in this appeal. If for some reason, the appellant was not able to determine the value at the time of removal of goods, the appellant could have and should have opted for provisional assessment of the goods under removal as it provided for in Rule 7 of the Central Excise Rules, 2002. Thus the appellant did not choose to comply with the provisions mandated by law but chose to adopt a practice which was not provided for in the law. IN our considered opinion, the benefit provided under t....
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....asis has been added to stress the definite article and the singular number). Thereafter, in terms of Rule 173F, the assessee can remove his goods after paying duty on the basis of the approved classification and value. The whole rationale of the Self Removal Procedure is that there shall not be an enquiry or clearance at the time of every individual removal of goods. However, initially and whenever required thereafter, there has to be an approval by the proper officer of the rate of duty and value claimed by the assessee. There is also a post clearances check and assessment, on the basis of the R.T. 1.2 returns. The entire procedure of prior approval of a price list and subsequent clearances on the basis of self-assessement would become largely meaningless if ti was open to an assessee to clear his consignments on the basis of varying assesseable values, accordingly to his wishes." (emphasis supplied) The above decision in the Tribunal was upheld by the hon'ble Apex Court in the same case reported in [1997 (94) ELT A160 (SC)]. If we apply the ratio of the above decisions to the facts of the case before us, it can be seen that in view of the expression "the goods" employed in....
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....iven to the retail customers by the dealers in respect of each brand of cars. In the process, the dealers would incur certain expenses in granting such incentives to the retail customers. In order to compensate and to reduce the burden of such expense on the part of the dealers, M/s. TML bears major portion of burden. Therefore, the Car Target Scheme specifies the extent of TML's contribution separately towards the said expenses. Once the dealer achieves the target at the end of each month, incentive amount of M/s. TML's contributions are calculated and passed on to the dealers as 'Special Discount' against the purchases of cars during the subsequent month by reducing the transaction value of certain numbers of Indigo Cars which carry a higher rate of duty. 5.7 From the car target and schemes described above, it can be seen that the incentives to the dealers are dependent on achieving both the off take target and the retail target fixed for each dealer. The incentives to the customers are cash discount, extended warranty, free insurance, loyalty bonus (to the existing Tata car owners), low interest rate scheme (interest subventions), and exchange bonus. As per th....
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....nt trade practice. M/s. TML is not the only assessee engaged in the business of manufacture and sale of Passenger Cars. There are many other manufacturers of Passenger Cars in the country. It has not been shown that similar practice is being followed by other manufacturers as well. 5.9 During the investigation, statements of some of the authorized dealers of M/s. TML were recorded. All of them had, inter alia, stated that the Car Target Schemes submitted by them were the only discount and sales policies circulated by M/s. TML. It will be worthwhile to see a few of these statements to understand how the dealers perceived this scheme. Statements of Dealers: 5.9.1 From the statements dated 20/08/2009, 16/11/2009, 13/11/2009, 27/10/2009, 21/10/2009, 5/11/2009, 23/11/2009 and 14/10/2009 respectively of Shri S.C. Vartak, Vice President of M/s. Pandit Automotive Pvt. Ltd., authorized dealer from Pune, Shri Suraj Dada, Managing Director of M/s. Dada Motors Pvt. Ltd., and Shri Ravleen Singh Grewal, Director of M/s. Garyson Motors Pvt. Ltd., authorized dealers for Ludhiana, Shri Gautamchand Jain, Managing Director of M/s. Autofin Ltd., authorized dealer for Secunderabad, Shri. P. Sr....
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....ta Motors Ltd. and adjusted/paid by Tata Motors as per Tata Motor's wish. (9) Though the dealers have been issued invoices by Tata Motors showing a discount of Rs.1,00,000/- on purchase of Indigo cars, they have not been communicated any such schemes allowing discount of Rs.1,00,000/-. (10) From December, 2007, Tata Motors were undertaking advertisement of cars, a portion of which is borne by the dealers and an amount @ Rs.500/- per car (for Indica and Indigo cars) and rs.1500/- per (Sumo & Safari) is adjusted towards the same and the remaining amount is paid as discount on the invoices of Indigo cars. 5.9.2 From the above, it clearly emerges that the dealers did not receive any communication whatsoever from TML nor did they know that they would be receiving discounts of Rs.30,000/-, Rs.45,000/- or Rs.1,00,000/-, as the case may be, by means of reduction in prices of Indigo cars (for a certain number of vehicles) cleared by them from the factory of TML in the subsequent month. Thus, though the dealers knew that they would be receiving some discount on achieving the targets for both off-take and retail, they had no knowledge whatsoe....
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....r target schemes are issued to the dealers. He admitted that no other circulars were sent by the State Headquarters of TML to the Regional Managers. Shri Vijay Menon who was brand manager for Indigo at the sales headquarters of TML also categorically admitted that none of the circulars issued during the period April, 06 to July, 08 contained the clause that Indigo Cars would be given discount of Rs.30,000/-, Rs.45,000/- or Rs.1,00,000/- as the case may be, on its off-take from the factory of TML to the dealer. Shri Vijay Menon also admitted that in his capacity as Brand Manager for Indigo at Sales Headquarters, he had not come across the so called circulars/incentive structures as submitted by Shri S.Krishnan in his statement dtd. 26/08/2009. 5.10.3 The statements of the two Regional Managers, as discussed above also corroborate the version of the dealers that they were never informed about the quantum of the discount (earned by them during a given month) which were to be passed on to them in respect of certain specified numbers of Indigo cars to be lifted by them in the subsequent month. 5.11 Statements of senior officials of M/s. TML Statements of some of the senior offi....
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....; Ans: This policy was authorized by the President (Marketing), M/s. TML. Q.No. 16 Whether the policy of paying to the dealers the amount/incentives due to them, by way of reducing the value of subsequent sale of cars, was in the knowledge of the then Managing Director of M/s. TML? Ans: This is a matter within the authority of President (Passenger Car Marketing). Q.No. 17 Who was the president (Passenger Car Marketing) in 2006? Ans: Shri Rajeev Dube was the President (Passenger Car Marketing) in 2006. Q.No.18 Why the incentives earned for Indica vehicles was paid by way of reducing the transaction value of Indigo vehicles only and not on Indica vehicles? Ans: This policy was decided by the Marketing Department. Q.No.19 Who authorized this policy at your Company? Ans: The President (Passenger Car Marketing) authorized this policy. Q.No. 20 Are you aware that the Indigo cars attract higher rate of Central Excise duty than Indica Cars? Ans: Yes, I am aware that t....
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....d in case of any short fall in the running account, he makes payment by cheques or through his financier. Q. No. 4 Does the dealer maintain a separate running credit account for Indica, Indigo and UV cars? Ans: He maintains separate running account for cars (Indica, Indigo) and UV. Q. No. 5 If M/s. TML has to make any payment to the dealer, how are they making such payments? Ans: Payments are made by crediting to the running dealer account. Q. No. 6 Why the incentives earned on Indica vehicles was paid by way of reducing the transaction value of Indigo Vehicles (except Indigo 'CS') only and not on Indica vehicles during the said period? Ans: The incentives earned by the dealer for both the brands i.e. Indica and Indigo were given to the dealer by way of reducing the transaction value on Indigo vehicles (except Indigo 'CS') only. I would not comment on why it was done so. Q. No. 8 Who authorized this policy at your Company? Ans: In April, 2006, I was the Head of Car Marketing of M/s. TML, I am ....
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....ake/retail target achieved by the dealer, based on the car target schemes issued by M/s. TML, was paid to the dealer by way of reducing value of UV (Sumo, Safari) @ Rs. 1,00,000 sold in the succeeding month from the factory of M/s. TML to the dealers? Ans: Yes, we have paid the incentive of Indigo/Indica in MUV (Sumo, Safari) for the months of Mar, 08 to May, 08. Q. No. 20 What is the reason behind this payment of incentives attributable to Indica/Indigo on the sale of UV's during Mar, 08 to May, 08? Ans: It is quite possible that adequate Indigo's were not available during those months to cover the incentives. Q. No. 21 Why these incentives were not passed on by reducing the value of Indigo 'CS' Cars? Ans: I will not comment on this. Q. NO. 22 Please state as to whether Indigos (except Indigo 'CS') and UV's attract higher rate of Central Excise duty than Indica's? Ans: Yes Q. No. 23 Please state as to whether Indigo 'CS' attract same rate of duty as that of Indica'....
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....VP (Commercial-PCBU), who has taken this decision. Q.No. 13 You are now being shown the statement, dated 02/03/2010 of Mr. C. Ramkrishnan, CFO, M/s. TML, wherein, he has stated that, Shri Rajiv Dube, President, Passenger Car Marketing has authorized the policy of payment of incentives earned by the dealers on Indica vehicles, by way of reducing the value of Indigo vehicles only'. Further, vide summons dtd. 22/03/2010, you have been asked to submit copy of such policy. Please produce the same. Ans: I can only say that the impression that any such policy was authorized by me is perhaps a mistaken one by Mr. Ramkrishnan, CFO, M/s. TML, as he joined the company later in 2007. I have already stated that I am not aware of any such formal policy sanction at my level and therefore, am not in a position to produce the same. Q.No. 14 You are now being shown statement dtd. 18/03/2010 of Shri S. Krishnan, Senior Vice President (Commercial) of M/s. TML has in his statement accepted that the incentives earned by the dealer for both the brand were given to the dealer by way of reducing the transaction value on Indigo vehicles (....
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....cles was authorized by the President-Passenger Car Marketing'. However Shri Rajiv Dube, in his statements dtd. 29/04/2010 has stated that, 'he has carried a mistaken impression and no such policy exists. As Managing Director of the company, please clarify the stand of M/s. TML on this issue. Ans: Shri S. Krishnan, as Head of Commercial Operations is responsible for taking such decisions and I shall go by his statement dtd. 18/03/2010. Q. No. 5 Shri S. Krishnan, Sr. Vice President - Commercial of M/s. TML in his statements dtd. 18/03/2010 has stated that the incentives earned by the dealers on both the brands, i.e. Indica and Indigo were given to the dealers by way of reducing the 'transaction value' of Indigo vehicles (except INDIGO CS) only. However, he has refused to answer as to why it was done so. Please state the official stand of M/s. TML on the reason for the above. Ans: Since Shri S. Krishnan is the person closest to this matter, I shall go by the statement dated 18/03/2010 of Shri S. Krishnan. Q. No. 7 Are you aware that the price reduction of Rs. 1.00 lakh on Indigo car....
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....Vice President (Commercial) and they were not a party to such important decisions, Shri Krishnan in his statement before the Investigating officer has admitted that the policy of passing on the incentives by way reduction in the transaction value of Indigo cars was as per his verbal instructions and the figures of price reduction of Rs. 30000/45000/100000 were arbitrary figures arrived at by him to pass on the incentives. Thus the top management of TML, barring Mr. Krishnan, were completely ignorant or unaware of how the discounts were determined and passed on to the dealers. If that be so, it is unimaginable how the dealers could have come to know about the quantum of discount or its delivery mechanism. From these evidences on record, it is clearly established that the so called discount circulars claimed to have been circulated to the dealers as submitted by Sri. Krishnan and Sri. Kulkarni were false and fabricated documents just to hoodwink/mislead the investigation. The appellant has relied on their Chief Internal Auditor's report wherein certain internal enquiry was conducted after the investigation started. It is claimed that it is part of their ethics programme of good g....
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....s just a compensation given by M/s. TML to its dealers, who have given certain incentives/benefits to their customers as a measure of sales promotion under the Car Targets & schemes of M/s. TML. 5.13 At the time of hearing, it was claimed that the dealers of TML were aware well in advance of the discount structure before removal of the goods. In support of this claim, attention of the Bench was invited to certain Monthly Circulars claimed to have been issued to the dealers. As seen, these circulars are addressed to the Regional Managers of TML with advice to inform the dealers of the incentive structure for the month. One such circular is reproduced below for ease of reference: Description: Legal Corner Icon 5.13.1 According to the revenue, these circulars are false & fabricated. These were created only to tell the investigation that the dealers were aware of the discount structure before removal of the goods. According to the revenue even the senior officials of TML were not aware of these circulars. Perusing the relevant record, particularly, the statements of some of the Dealers, Regional Managers and Senior Officials of M/s. TML as noted in the foregoing paragraphs, it....
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....alized by only one person and the quantum and form adopted for passing on the discounts were arbitrary. (7) There is no evidence brought out by the appellant that the novel discount scheme adopted by them was an industry/trade practice and the dealership agreement did not also envisage any such scheme. (8) There is also no evidence on record to show that the goods on which the discounts were given (by price reduction of cars) while effecting sales to the dealers were passed on to the customer, that is, buyers of the cars. In fact the evidences available on record prove the contrary. (9) An attempt, was made to mis-lead the investigation by submission of false/fabricated circulars claimed to have been issued to the dealers the receipt of which has been denied by all the dealers. Even the Regional Sales Managers who were directed to circulate the same were not aware of their existence as also the top management who were directly concerned with the business operations of the appellant firm. 6. It would be useful at this juncture to look at the settled position in law with respect to admissibility of discounts. Though....
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....tomers within one and the same class of buyers would be acceptable and came to the conclusion that acceptance of a multiplicity of assessable values under the same conditions would cut at the very basis of the Self-Removal procedure and therefore, for the same goods under the same conditions (which would include the same class of buyers), only one assessable value would be acceptable. The said decision of the Tribunal was affirmed by the Hon'ble Apex Court. 6.4 A Larger Bench of this Tribunal in the case of Maruti Suzuki India Ltd. [2010 (257) ELT 226 (Tri-LB)] had an occasion to examine the scope of "transaction value" as defined in section 4 of the Act (after its amendment with effect from 1-7-2000) and held as follows:- "15. The definition of the expression "transaction value" undoubtedly uses the expression any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including.......... servicing, warranty, commission or any other matter,........" Apparently, the transaction value does not merely include ....
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....discount. That is, it is not known at or prior to the removal of the goods; it is not in accordance with any established trade practice; it is not in accordance with any established trade practice; it is uniform within the same class of buyers; it is purely arbitrary; it is a compensation for the services rendered by the dealers on behalf of the manufacturer, masqueraded as a discount; it is not passed on to the end customers; and it is not passed on as a price reduction of the goods to which it pertains to. Thus the so called special discount claimed to have been passed on by the appellant to the dealers is not a trade discount at all so as to be eligible for exclusion from the assessable value of the goods removed as per the provisions of section 4 of the Central Excise Act. Therefore, denial of abatement of the said discount from the assessable value of the goods sold is clearly sustainable in law and accordingly, we uphold the demand for differential duty confirmed in the impugned order, Arguments to the contrary made by the appellant in this regard merits total rejection. The appellant has relied on a number of judicial pronouncements in support of their claim that the special....
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....d the present car targets and retails schemes were the same and the fact of cross model utilization of discounts was known to the department and the department had never objected to the same. Therefore, extended period of time could not have been invoked to confirm the duty demands. We do not find any merit in this contention for the following reasons. The scheme which was in existence in 2001/2003 related to "performance bonus" granted to the dealers by way of a flat discount of Rs.20000/- per car based on the number of vehicles purchased by the dealers in 2001-02 and thereafter. The criteria governing the said scheme was sales performance, spare parts performance, performance of receivables and so on. The criteria governing the car target and retail schemes include services rendered by the dealers to the customers on behalf of the appellant manufacturer such as warranty services, insurance services, financial services, loyalty and exchange bonuses and the quantum of discounts vary from month to month and year to year. Thus the schemes were significantly different, both in form and content. Further as discussed in the preceding paragraphs, we have concluded that the quantum of dis....
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....r it would tantamount to rewriting the statutory provision and no canon of interpretation permits such an exercise by any Court. If it is not open to the superior court to either add or substitute words in a statute such right cannot be available to a statutory Tribunal. 17. The proviso cannot be read to mean that because there is knowledge the suppression which stands established disappears. Similarly the concept of reasonable period of limitation which is sought to be read into the provision by some of the orders of the Tribunal also cannot be permitted in law when the statute itself has provided for a fixed period of limitation. It is equally well settled that it is not open to the Court while reading a provision to either rewrite the period of limitation or curtail the prescribed period of limitation. 7.1 It is also on record that the appellants themselves had admitted to part of the duty liability and had paid the same along with interest and 25% of the penalty during the investigation stage which is a clear pointer to the admission of guilt on the part of the appellant. Further, the appellant resorted to subterfuge by fabricating false documents to mi....