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2014 (6) TMI 162 - CESTAT MUMBAIDemand of differential duty - Interest - valuation of cars sold to dealers - Indica cars are smaller compared to Indigo cars and at the relevant time, they carried lower a rate of duty, compared to Indigo cars and utility vehicles - reduction in the assessable value of Indigo cars (except Indigo CS Model) in the guise of 'Special discount' - Whether the so called 'special discount' claimed to have been passed on by the appellant to its dealers can be treated as a permissible trade discount or not - Held that:- article preceding the expression "goods" and "price" in the said section 4 is the definite article "the" and not an indefinite article. The use of the definite article implies that section 4 envisages determination of value in respect of the goods under removal for each removal of the goods. Therefore, if the valuation has to be done in respect of Indica cars which are removed and on which discounts are being offered on sale, the benefit of such reduction has to be made by reducing the price of Indica cars and determination of value has to be made for each removal of Indica cars. It is an admitted fact in the case before us that this has not been done. The price reduction has been effected not on the goods to which it applies but by reducing the price of some other goods (other models of cars) which were cleared at a subsequent point of time. Thus the provisions of section 4 have not been adhered to or complies with on the transactions with which we are concerned with in this appeal. If for some reason, the appellant was not able to determine the value at the time of removal of goods, the appellant could have and should have opted for provisional assessment of the goods under removal as it provided for in Rule 7 of the Central Excise Rules, 2002. Thus the appellant did not choose to comply with the provisions mandated by law but chose to adopt a practice which was not provided for in the law - benefit provided under the law cannot be claimed when the conditions prescribed are not complied with or adhered to. It is a well-settled statutory principle that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and no other. It can be seen that the Car Target Schemes do not specify or spell out in what form and in what manner the incentive amounts will be given to the dealers. It is on record that each dealer has a running account maintained with M/s. TML. Therefore, as a matter of accounting, in the normal course, the incentive amounts should have been credited to the dealer's running account maintained with M/s. TML. However, instead of doing so, M/s. TML chose to pass on the incentive amounts to the dealers in the guise of 'Special Discount' by reducing the transaction value of only the Indigo Cars purchased by the dealers during the subsequent months. These incentive amounts earned by the dealers by achieving the targets fixed by M/s. TML cannot be termed as a 'Special Discount' for the following reasons. The so-called 'Special Discount' has no relation to the goods under assessment and has not been passed on by reducing the price of the goods under assessment. Further, it has not been shown by M/s. TML that this is the normal prevalent trade practice. M/s. TML is not the only assessee engaged in the business of manufacture and sale of Passenger Cars. There are many other manufacturers of Passenger Cars in the country. It has not been shown that similar practice is being followed by other manufacturers as well. The amount paid to the dealers are by way of incentives to achieve the target. The incentives given were TML's contribution to warranty services, insurance services and so on. In spite of the dealers maintaining a running account with TML through which payments to and from were adjusted, as regards the "special discount', the same was passed on not by adjusting the running account but by reducing the price of Indigo cars cleared during the subsequent month. While the Chief Financial Officer (CFO) thought that this policy was authorized by the President (Marketing) of the Passenger Car Business Unit, the latter has completely denied the same and has admitted that there was no such formal policy for grant of incentives/discounts. So-called "special discount" offered by the appellant does not conform to any of the requirements of the trade discount. That is, it is not known at or prior to the removal of the goods; it is not in accordance with any established trade practice; it is not in accordance with any established trade practice; it is uniform within the same class of buyers; it is purely arbitrary; it is a compensation for the services rendered by the dealers on behalf of the manufacturer, masqueraded as a discount; it is not passed on to the end customers; and it is not passed on as a price reduction of the goods to which it pertains to. Thus the so called special discount claimed to have been passed on by the appellant to the dealers is not a trade discount at all so as to be eligible for exclusion from the assessable value of the goods removed as per the provisions of section 4 of the Central Excise Act. Therefore, denial of abatement of the said discount from the assessable value of the goods sold is clearly sustainable in law and accordingly, we uphold the demand for differential duty confirmed in the impugned order, Arguments to the contrary made by the appellant in this regard merits total rejection - Decided against assessee.
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