2009 (6) TMI 772 - AT - Central Excise

Valuation (Central Excise) - Discount on turnover - Para 9 of the Circular dated 13-6-2000 - Held that - the appellants had issued a circular to all the dealers about availability of discount on Mar. 15 2003 which shows that the turnover discount and its quantum was known to both dealers and the appellants - perusal of Para 9 of the Circular dated 13-6-2000 also shows that the last two lines which required provisional assessment to be resorted to and department to be informed were basically procedural. It is not the case of the department that because such non-intimation or provisional assessment was not requested for the department has not been able to arrive at the correct assessable value. Department has also not examined whether the discount has been passed on or not. Further the requirement of provisional assessment and intimation are not prescribed by statute. We also note that it is a case where provisional assessment was not resorted to and department was not informed the appellant can not be denied the benefit of deduction of turnover discount which is admissible discount as per the provisions of Section 4 - matter remanded to the Original Adjudicating Authority who shall examine the refund claim and eligibility of the appellants for refund to arrive at exact amount admissible and also to examine the aspect of unjust enrichment - appeal allowed by way of remand.

Issues:
Refund eligibility based on turnover discount and credit notes, reliance on circular issued by CBEC, rejection of refund claims, requirement of provisional assessment, disclosure of discount intention, procedural aspects of assessment, applicability of law for refund eligibility, examination of refund claim, admissibility of discount, known discount at the time of transaction, case law references, provisional assessment requirement, departmental examination of discount passing, non-prescription of provisional assessment and intimation by statute, denial of benefit due to non-resort to provisional assessment, remand for further examination.

Detailed Analysis:

The appeal was filed against an order where the Commissioner (Appeals) rejected the refund claim of the appellants, stating that they are not eligible for the refund as they had passed on turnover discount to dealers through credit notes, based on a circular issued by CBEC. The appellants argued that the claim was rejected because they did not resort to provisional assessment and did not disclose the intention to pass on the discount to the department. They contended that eligibility for the refund should be based on the law, not procedural aspects like provisional assessment. The advocate cited the Circular and various decisions supporting their contention that they are entitled to the refunds. The Departmental Representative reiterated the arguments in the impugned order.

The Tribunal examined the submissions and highlighted Para 9 of the Circular dated 13-6-2000, which states that discounts passed on to buyers do not form part of the transaction value. The Tribunal referred to case law where refund claims were allowed even without seeking provisional assessment, emphasizing that the focus should be on the actual passing on of discounts. In specific cases like Telephone Cables Ltd. and Mauria Udyog Limited, refund claims were accepted despite no resort to provisional assessment. The Tribunal also noted that discounts not included in invoices but later paid through credit notes were considered admissible deductions. It was observed that the appellants had informed all dealers about the discount, showing that both parties were aware of it. The Tribunal concluded that the requirement for provisional assessment and intimation were procedural and not statutory, and the non-compliance with them should not deny the appellants the benefit of deduction of turnover discount under Section 4. The impugned order was set aside, and the matter was remanded for further examination by the Original Adjudicating Authority to determine the admissible amount and assess unjust enrichment.

In summary, the judgment focused on the eligibility of refund claims concerning turnover discounts passed on through credit notes, the relevance of the Circular issued by CBEC, the necessity of provisional assessment, and the procedural versus statutory aspects of assessment requirements. The decision emphasized the importance of actual passing on of discounts, as evidenced by case law references, and concluded that the failure to resort to provisional assessment should not automatically disqualify the appellants from claiming the benefit of deduction of turnover discount.

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