TaxTMI 
TaxTMI 
TaxTMI 
2023 (6) TMI 538
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessed at the values mentioned in the invoices. However, in respect of goods cleared through the distributors , the distributors were given a discount called "Base Discount" of up to 15% of the price declared in the invoices . Thus it was noticed that there were two sets of assessable value for the same product i.e. the higher value in case of direct sales and discounted value for the clearances made to distributors. 1.2 It has been the contention of the department that the discount offered to the distributors as per the agreement between the appellant and their distributors are for performing installation and after sale services within the warranty period of the product. The service of installation and after sale service within the warranty period was required to be provided by the distributor as per the distributor's agreement and the expense incurred towards such installation and after sale service were to be borne by the distributor and such expenses were not to be reimbursed by the appellant to its distributors. It is further contended by the department that in the case of the direct sales by the appellant to its actual users, the expenses with regard to installation and afte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mparison of the prices between the direct sales and the sales through the distributor. 2.2 The Learned Advocate argued that even in case the departments contention is accepted fir time being and the discount is considered as consideration for after sale services provided by the distributor even then the same cannot be included in the assessable value as it is a settled law that post manufacturing expenses like after sale service incurred by the distributor cannot be included in the transaction value for payment of excise duty. The Learned Advocate has placed reliance on the following judgments in this regard. * CCE, Mysore Vs. TVS Motors Co. Ltd - 2016 (331) ELT 3 (SC) * Tata Motors Ltd Vs. Union OF India - 2012 (286) ELT 161 (Bom.) * Skoda Auto Volkswagen India Pvt. Ltd Vs. CCE - 2021 (12) TMI 239- CESTAT Mumbai 2.3 On the basis of above, it has been submitted that demand of excise duty confirmed under the impugned order-in- original on the value of discount passed on by the appellant to the distributor is not sustainable in law as well as on merit. 2.4 The Learned Advocate also drawn our attention to the fact that the show cause notice does not invoke the provision of Ru....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng, warranty, commission or any other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods." From the reading of the above provisions of Central Excise Act, 1994 it reveals that for transaction value to be accepted for the purpose of the assessement, the following three essential ingredients needs to be satisfied with regard to transaction value:- (i) the goods are sold by an assessee for delivery at the time of place of removal , the term " place of removal" removal has been defined basically to mean a factory or warehouse or any other premises which are in the possession of the asseessee. (ii) The assessee and buyer of the goods are not related. (iii) The price is only consideration for sale. Thus, it can be seen that the Section 4 essentially seeks to accept different transaction value which may be charge by an assessee from it different buyers. For assessment purpose so long as this are based upon purely commercial consideration where buyer and seller have no relationship and the price remains sole consideration for sale. This way it enables valuation of goods for charging excise du....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the goods from the place of removal i.e. Depot and discount was shown in the sale invoice. In recent judgment of Purolator India Ltd. v. Commissioner of Central Excise, Delhi-III, we find that as per the definition of 'transaction value' under the amended Section 4 the "transaction value" means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, 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, but not limited to any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter, but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods. From the above definition it can be seen that the actual amount that the buyer is liable to pay at the time of sale or at any other time shall be the transaction value. In the present case admittedly the sale has not taken plac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....servation on facts and settle legal position of law, we are of the considered view that quantity discount was correctly claimed by the appellant as the same was claimed at the time of sale of the goods. We therefore set aside the impugned order and allow the appeal of the appellant." 5.4 We also take note of this Tribunal's decision in the case of M/s. Mercury Pneumatics Ltd VS. CCE, Mumbai reported under 2017 (348) ELT 474 (Tri. Mum) "3. The relevant facts arise for consideration are appellant was engaged in manufacturing of excisable goods falling under Chapter Headings 84 & 85 of CETA, 1985 and sell the products through sales agent appointed for different area and also sell directly to the customers. In case of sales made directly to the customers, the concerned sales agent in the area is given a commission of 10% to 20% depending upon the product and the amount of commission is loaded in the assessable value. In case of sales made to the sales agent a discount of 10% to 20% is shown on the invoice raised in the name of the agent which is deducted to arrive at assessable value. Show cause notices were issued for the period April, 98 to March, 2003 directing the appellant to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the sales transaction. The first set of sale of transaction through sales agent i.e. wherein the sales agent assist the ultimate customers to place an order directly on the appellant for the procurement of the final product while in the 2nd set of transaction, sales agent purchases the products from appellant herein for resale. We find strong force in the contention raised by the learned Counsel that the statement of Shri Paul D'Souza, Accounts Manager of the appellant (page 13 of the appeal book) clearly brings the fact that they sell goods directly to the customers for the order placed and also sell their goods to sales agents. The sales agents become entitled to the commission when order is procured through sales agents. In the same statement it is also made clear that another set of transaction which is of sale on principal-to-principal basis to the very same persons who are acting as agents and the said transaction are at arms length. We have noted that one of the dealer Shri Bhagvat in his statement clearly indicated that the relation between him and the appellant is of purchaser and the seller and he is registered as dealer with the Excise authorities and he passes on the Ce....