TaxTMI 
TaxTMI 
2015 (7) TMI 343
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....industry, the petitioner company, in order to boost the sale of finished goods through the dealers offers various promotional schemes in the form of turn over/quantity discount, cash discount etc. While these discounts are made known to the dealers even before the clearance of the finished goods from the factory by way of claims notified and published from time to time, quantification thereof is possible only at the end of the notified period. The dealers fulfilling the qualification conditions become eligible to get duty discount at the end of the notified period, processed by way of credit notes. (3) Central excise duty is leviable on the goods manufactured and cleared by the petitioner company in terms of the provisions of Section 3 of the Central Excise Act, 1944 read with the Central Excise Tariff Act, 1985. The manner of valuation of the excisable goods manufactured by the petitioner for the purpose of charging excise duty thereon is provided for in Section 4 of the 1944 Act. The relevant portion of the Section 4 of the Act is set out hereunder:- " S. 4. Valuation of excisable goods for purposes of charging of duty of Excise (1) Where under this Act, the ....
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....Act. 'Transaction value' is defined to mean the price actually paid or payable for the goods when sold and additional consideration which the buyer is liable to pay to or on behalf of the assessee in connection with the sale. The price 'actually paid or payable' for the goods manufactured and sold by the company is the net price arrived at upon deduction of the discounts offered by the company to its buyers. It is the discounted price which is the transaction value of the subject goods on which central excise duty is required to be paid by the company. (5) The petitioners further submit that at the time of clearance of the goods, in view of the nature of the trade discounts, it is not possible to arrive at the price actually paid or payable for the goods being sold by the company. Since the quantity/turn over discounts are based on achievement of the target and are allowed on varying rates depending upon the slab which a particular dealer attains in terms of the relevant scheme, it is not possible to quantify the discount at the time of clearance of a particular consignment from the factory. Hence, the petitioner company being unable to determine the correct 'transaction valu....
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....ir nature, such discounts cannot be shown in the invoice under which the subject excisable goods are manufactured from the factory since the quantum of discounts is known only at the end of the achievement of the target by the respective customers and because of their varying rates depending upon the slab which a particular dealer achieves in terms of the scheme under which such discounts are provided. It is, therefore, impossible for the company to determine the correct transaction value of excisable goods on which central excise duty is payable at the time of removal of the said goods from the factory. The actual price paid or payable for such goods would be a net price after deduction of the trade discounts. The requirement of Rule 7(1) of the 2002 Rules for the subject goods to be allowed to be cleared on provisional assessment basis is duly satisfied. The company being agreeable to comply with the requirements of Rule 7(2) of the said Rules, there can be no justification on the part of the respondent no. 1 to deny clearance of the subject goods by the petitioner company on provisional basis in terms of Rule 7 of the said Rules. (9) Ld. Counsel relied on a circular dated 30t....
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....h a circular is not binding on a court or an assessee, it is not open to the Revenue to raise a contention that is contrary to a binding circular by the Board. When a circular remains in operation, the Revenue is bound by it and cannot be allowed to plead that it is not valid nor that it is contrary to the terms of the statute. (2) Despite the decision of this court, the department cannot be permitted to take a stand contrary to the instructions issued by the Board. (3) A show-cause notice and demand contrary to the existing circulars of the Board are ab initio bad. (4) It is not open to the Revenue to advance an argument or file an appeal contrary to the circulars." (11) Ld. Counsel for the petitioners then relied on a judgment of this Court in the case of Commissioner of Central Excise, Calcutta-vs.-Black Diamond Beverage Ltd. reported in 2014 (307) ELT 679 wherein this court also observed that a circular issued by the Board binds the revenue and they cannot take a stand that the circular is contrary to the provisions of the statute. (12) Ld. Counsel also referred to a decision of the Madras High Court in the case of Manickam Enterprises-vs.-Commi....
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....f Madras High Court in the case of Shree Ganesh Steel Rolling Mills Ltd.-vs.- Asstt. Commissioner of Customs, Chennai reported in 2006 (206) ELT 76 wherein at paragraph 28 of the judgment it was observed that Section 18 (1) of the Customs Act does not make it mandatory on the customs officer to make a provisional assessment. The use of the word 'may' in Section 18 (1) indicates that it is the discretion of the customs officer to make a provisional assessment or not, and he is not duty bound to do so. Of course, he cannot exercise such discretion arbitrarily. In the facts of the case, the Madras High Court held that the customs officer had acted fairly and not arbitrarily. (16) I have considered the rival contentions of the parties. (17) The case of the petitioners turns around Rule 7 of the Central Excise Rules, 2002, the relevant portion whereof is set out hereunder:- "R.7. Provisional assessment. - (1) Where the asssessee is unable to determine the value of excisable goods or determine the rate of duty applicable thereto, he may request the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, in writing giving r....
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....xcise in his order dated 21st May, 2014 rightly held that the value of the goods cannot be determined at the time of removal of such goods from the factory. This is for the reason that the normal transaction value is not available for such removals at that time as the assessee at that time cannot determine the quantity of discount being extended to the buyers. This can be done only at a later stage, precisely at the end of discount scheme period offered to the dealers which is usually after four months. As per paragraph 9 of the Central Board of Excise and Customs circular dated 30th June, 2000 referred to above, discount of any type made known prior to the clearance of the goods but quantified subsequently and passed on to the customers is an admissible deduction from the transaction value and as such the assessment for such transactions may be made on a provisional basis. The said circular is binding on the department and in this connection the decision of the various courts including the Hon'ble Supreme Court discussed above may be referred to. (21) I am of the clear opinion that no legitimate ground exists for the department to disallow the petitioner company to pay excise d....