2005 (7) TMI 266

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....penalty of Rs. 5 lakhs under Rules 173Q and 210 of the Central Excise Act, 1944. Interest under Section has been demanded. 2.The appellants manufacture polyester film in  filament yarn, an excisable commodity. They sell the goods from the factory as well as from the depots. The appellants give various types of discounts such as cash discount, quantity discount, continuity discount, exclusive discount, special discount etc. These discounts are claimed as a consolidated percentage of the basic rate and are indicated in the declarations filed under Rules 173C and 173C(3A) from time to time. The appellants claim the abatement of the discount to arrive at the assessable value for the purpose of payment of Central Excise duty. The discount....

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....p;   Section 4(4)(d)(ii) of the Central Excise Act, 1944 as it stood during the relevant period provides for exclusion of discounts from the assessable value provided the same is allowed in accordance with the normal practice of wholesale trade. (2)        It is well settled that cash discounts may be passed on even after the clearance of the goods provided discount is known to the buyer prior to or at the time of clearance of the goods following case laws are relied on (a)        UOI v. Bombay Tyre International Pvt. Ltd. - 1984 (17) E.L.T. 329 (S.C.) (b)        Govt. of India v. Madras Rubber Factory Ltd. - 1995 (77) E.L.T....

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....bsp;      Commr. v. H.R. Johnson (India) Ltd. - 2000 (119) E.L.T. A239 (S.C.) (l)         CCE, Meerut v. S.R. Fragrances Ltd. - 2000 (116) E.L.T. 638 (m)       Pedder & Pedder Tiles Ltd. v. CCE, Pune-I - 2000 (120) E.L.T. 751 (Tri.) (n)        West Coast Paper Mills Ltd. v. CCE - 2000 (122) E.L.T. 859 (Tri.) (o)        Kesoram Rayon v. CCE - 2001 (136) E.L.T. 382 (Tri.-Kolkata) (p)        CCE v. Agsar Paints (P) Ltd. - 2001 (137) E.L.T. 611 (Tri-Chennai) (q)        Asian Paints (I) Ltd. v. CCE, Mumbai-II - 2002 (14....

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....ustomers. This has not been done. The department cannot reject the evidence produced by the appellant and confirm the demand. (7)        The demand is for the period from December, 96 to June, 2000. The show cause notice has been issued on 2nd January, 2002. The entire demand is thus time barred. Invocation of longer period under Proviso to Section 11A is not sustainable for the following reasons : (a)        The department was aware of the fact that the appellants were giving various discounts. (b)        appellants have filed the declarations under 173C and 173C(3A). (c)        The issue of discounts ....

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.... CCE - 1989 (43) E.L.T. 195 (S.C.) (c)        Pushpam Pharmaceuticals Company v. CCE, Bombay - 1995 (78) E.L.T. 401 (S.C.) In view of the above submissions, the penalties imposed and demand of interest are not sustainable. 4.The learned DR submitted that in the invoice, the  appellants have arrived at the duty after taking into account, the discount. This is clear from the invoice, as the appellants have included the same amount in the invoice as "others" this represents freight and the discount element. In other words, even though the appellants have claimed abatement they have not actually passed on the discount to the buyers. In view of this there is suppression of facts and longer period is r....