TaxTMI 
TaxTMI 
2024 (4) TMI 167
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....rt question in the impugned appeal concerns the alleged contravention of the provisions of Rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 The Valuation Rules read with Section 4(1)(b) of the Act. 3. The appellant is a manufacturer of iron and steel articles like pig iron, ingots, blooms, angles, channels, etc., falling under Chapter 72 and Chapter 73 of the Central Excise Tariff Act, 1985 The Tariff Act. The products manufactured by the appellants are sold by them at the factory gate as well as through their depots / Branch Sales Offices (BSOs) by way of stock transfers for onward sale. The appellant submits that the pricing of the goods is determined by their Central Marketing Organization (CMO) which decides the prices at which the goods are required to be sold from the plant as well as the depots / BSOs and accordingly releases the price lists for the various goods for sale. The appellant contends that apart from the price list, the CMO allows the plant as well as the depots / BSOs to provide further discounts uniformly to all buyers on the prices indicated in the price lists so as to match the price of the competitors located a....
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....ppellant that the individual BSOs / depots allowed the MPRs based on the prevalent market conditions and requirements and accordingly, invoices were raised, passing on such discounts to the customers at the time of ultimate sale. The salient features of the MPRs are as under : - i. The MPR is in the nature of trade discount, which is allowed for both direct sales from factory gate as well as dispatches to BSOs and is not refundable by the buyers under any circumstances. ii. The MPR is communicated to all the plants and BSOs for further communication to the customers. In order to arrive at the normal transaction value i.e., the value at which goods are sold from BSOs, prices mentioned in the price circular are adjusted by way of providing MPRs. Further, as per the system in vogue, for dispatch to BSOs, at the time of issuance of invoice, the system searches for transaction value for the past two months and if no transaction value is available, then the system raises invoices based on the price circular less MPRs. iii. The MPRs are shown separately on the invoices. iv. The purpose of providing the MPRs is to arrive at a realistic price prevalent in....
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..... Ghosh, Ld. Authorized Representative for the Revenue, however supports the adjudication order and submits that the price adopted for the purpose of valuation by the appellants cannot be construed as the normal transaction value for the reasons as enumerated hereinabove. He therefore supports the adjudication order and reiterates the findings. 6. We have heard the rival contentions of the two sides and perused the case records. 7. To appreciate the admissibility of discounts, it would be necessary to refer to Section 4(1) of the Act as well as Rule 7 of the Valuation Rules. The same are therefore enumerated hereunder: - ▪ Section 4(1) of the Central Excise Act, 1944: "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 trans....
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....untant is scanned and reproduced hereinbelow, confirming the said statement made : - 9. In terms of Rule 7 of the Valuation Rules, any discount given at the time of clearance of goods ought to be allowed for assessment of goods transferred to the BSO when the same is passed on to the final customers. We note that with reference to an Across the Board Rebate (equivalent to MPR), this Tribunal in the appellant's own case Steel Authority of India Ltd. v. Commr. [2006 (199) E.L.T. 112 (Tri. - Del.)] had held as under: - "8. With regard to the second ground of demand i.e. ineligibility of ABR for deduction while fixing/assessing the value, we find that the appellant had established before the lower authorities that the price realized from the buyers of the goods from the depots were invariably lower than the price at which the goods had been assessed to duty at the time of their removal from the factory. The ABRs in question were determined by the Central Marketing Organisation of the steel plant on a monthly basis and conveyed to the sales depots. It is seen that the sales depots either charged sales prices after deducting the ABRs or the ABRs are passed on to the customers....
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....0 (121) E.L.T. A224 (S.C.)]. 9.2 Therefore, the rebate as was known by way of MPR and uniformly passed on would be required to be taken note of for determination of the assessable value. 9.3 We also note that there is a complete similarity in the factual matrix of the appellant's own case, with the present issue at hand inasmuch as the CMO determined the ABRs (in the present case, MPRs) and indicated the same to the plant as well as depots. The goods were sold from the depots after allowing such ABRs (in the present case, MPRs) indicated on the face of the invoice. Also, the Chartered Accountant's certificate furnished both in the said case and the present case referred to supra, establishes that the cumulative value of the ABRs (in the present case, MPRs) allowed from the depot exceeded the ABRs (or MPRs) as claimed by the appellant. 10. The Hon'ble Apex Court's decision in the case of Purolator India Ltd. v. Commissioner of Central Excise, Delhi-III [2015 (323) E.L.T. 227 (S.C.)] has also upheld the admissibility of discounts that were passed on to the buyers and were known at the time of clearance of goods as eligible deduction for the purpose of determination of the as....