ELECTROLUX KELVINATOR LTD. Vs. CCE

JUDGEMENT

(1.) THE appellant is manufacturer of refrigerators which are liable to central excise duty on ad valorem basis. Under the impugned order the Commissioner (Appeals), Customs and Central Excise, Jaipur has confirmed a short -levy demand of Rs. 2,76,95,173/ - on the appellant. A penalty of Rs. 50 lakhs has also been confirmed. The duty demand is in respect of refrigerators cleared by the appellant during the period May 1996 to 19.5.1998. The demand was raised under 9 Show -cause Notices issued on 3.12.96, 2.4.97, 27.6.97, 30.7.97, 29.10.97, 26.12.97, 23.2.98, 15.5.98 and 4.8.98.

(2.) THE subject of dispute is the valuation of the refrigerators. At the time of original clearance of the goods, the appellant deducted the under -mentioned discounts from sale price of the goods and treated the amounts so obtained as the assessable value and discharged central excise duty at the rates applicable:

(3.) IN the present appeal, it is the submission of the appellant that the finding that the above discounts were not eligible to deductions is contrary to settled law. It has been pointed out that Apex Court has held in Union of India and others vs. Bombay Tyres International Pvt. Ltd. ( 2002 -TAXINDIAONLINE -33 -SC -CX ) that trade discount, by whatever name known prior to removal of goods, even through payable subsequently, is permissible for deduction .The appellant has also submitted that the observations of the Commissioner (Appeals) that discounts are not known is not correct in the facts of the case, inasmuch 90% of the discounts were given in the invoices themselves. During the hearing of the case, the appellant has referred us to the relevant invoices in support of their contention. It has also referred to price declarations made to the Department to substantiate the submissions. The remaining discounts are also passed on subsequent to sale through credit notes. During the hearing of the case, learned Counsel for the appellant has pointed out that the only discount which had not been passed on fully is quantity discount in certain cases. He submitted that these discounts were conditional to buyers purchasing targeted quantities and in certain cases where such targets were not met by the buyers, the discount was not passed on. Learned Counsel submitted that duty liability on account of such quantity discount which was not passed on, worked out to Rs. 60,52,682/ - while during the investigation of the case the appellant had deposited a sum of Rs. 1.5 crores in April 1998.