M/S SAMTEL INDIA LTD. Vs. CCE, JAIPUR

JUDGEMENT

(1.) THE issue involved in this appeal, filed by M/s. SAMTEL India Ltd., is whether Turn -over discount granted by them to their customers is to be deducted from the assessable value.

(2.) Shri B.L. Narsimhan, learned Advocate, submitted that the Appellants sell picture tubes for black & white televisions manufactured by them to various wholesale buyers and industrial consumers; that they have a system of offering discount to customers depending upon their off -take during a particular month; that when the goods are initially sold at a mutually agreed tentative price and at the end of the month when the particular buyer meets the requirement stipulated for the eligibility of the discount, the same is passed on in the form of Credit Notes; that the Dr. Commissioner disallow the deduction of the said discount from the assessable value on the ground that the overall policy of admissibility of discount was not known to the buyers at the time of removal of the goods; that their appeal was also rejected by the Commissioner (Appeals) under the impugned order. The learned Advocate, further, submitted that though the availability of the discount is known to the customers at the time of removal of the goods the exact quantum of the discount that is available is not known to the customers at the time of removal of the goods; that the exact quantum of discount is known only at the end of the month when the discount is passed on in the form of Credit Notes; that the Supreme Court in the case of UOI vs. Bombay Tyres International (P) Ltd.,, 1984 (17) ELT 329 (SC) held that the discount allowed in the trade should be allowed to be deducted from the sale price, if established under agreement or under terms of sale by established practice; allowance and the nature of the discount being known at or prior to the removal of the goods; that as the knowledge regarding availability of the discount prior to the removal of the goods is known to the buyers, the test laid down in Bombay Tyre International case is satisfied. He also mentioned that as it is an established practice of the grant of Turn -over discount, every buyer was aware at or prior to the removal of the goods about the availability of the discount; that as it was an established practice which has also been recognised by the Court in Bombay Tyres International case, there is no necessity of any document or circular etc. He also contended that undisputedly the discount claimed for abatement has actually been passed on to the customers, and accordingly excise duty is required to be levied only on the value which has been actually collected from the buyers. Reliance was placed on the decision in the case of CCE, Meerut vs. Pashupati Acrylon Ltd., : 2000 (120) ELT 768 (Tribunal), wherein it was held that assessment to excise duty must be on the basis of normal price at which such goods are sold to each buyer.

(3.) LEARNED Advocate, further, submitted that as the show -cause notice was issued on 4.6.98 demanding duty for the period from July, 1997 to March, 1998, demand for the period upto November, 1997 is barred by time limit as the extended period for demanding duty is not invokable; that no material information was suppressed from the Department; that they had filed a price declaration in which they had clearly indicated that the customers would offer varying discount and credit notes are issued for granting discount; that as the goods are stock transferred and sol from depot they prepare a statement at the end of each month clearly stating therein invoice -wise details of goods stock transferred, the price at which the excise duty was paid, the price at which the goods have actually been sold and the amount of discount that has been offered; that on the basis of this statement they arrived at the excise duty liability if any, which is debited by them; that these statements have been submitted month after month; that, further, based on these very statements the duty demand has been made by the Department; that thus is cannot be claimed by the Department that it was not sufficient information about the nature of discount passed on to the customers; that it has been held by the Apex Court in Pushpam Pharmaceutical Co. vs. CCE, Bombay, : 1995 (78) ELT 401 (SC) that "where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression." He also mentioned that it is settled legal position that mere inaction on the part of the Assessee is not sufficient for invoking the provision to Section 11A(1) of the Central Excise Act and something more positive on the part of the Assessee with an intent to evade payment of duty is to be proved. Reliance was placed on the decision in the case of Padmini Products vs. CCE, : 1989 (43) ELT 195 (SC). Finally, he submitted that as there was no suppression of facts, penalty under section 11AC is also not imposable; that penalty under Rule 173Q of the Central Excise Rules is also not sustainable as they had complied with all requirements of the law and filed all the necessary documents with the department and there was no procedural or substantive violation of the provisions of the Act and Rules; that in terms of Section 4(4)(d)(ii) of the Act and in terms of the decision of the Larger Bench of the Tribunal in the case of Shree Chakra Tyres vs. CCE,, 1999 (32) RLT 1 the price is to be treated as cum -duty price and the assessable value has to be re -worked after giving abatement of the excise duty payable.