2007 (2) TMI 43 - AT - Central Excise

Adjudication Alleged that the assessee have not passed on the discount and therefore they were liable to pay duty on the entire trade discount so claimed by them After considering all the fact authority dismissed the revenue appeal.

Summary

Issues:
- Discrepancy in passing trade discount on electrical fans by M/s. Crompton Greaves
- Calculation of excise duty based on discount not passed on
- Applicability of penalty on the duty amount
- Confirmation of demand by the Commissioner
- Appeal by the Revenue regarding incomplete investigation

Discrepancy in Passing Trade Discount:
M/s. Crompton Greaves, engaged in manufacturing electrical fans, faced allegations of not fully passing on trade discounts claimed on fan clearances. The Commissioner demanded duty on the entire trade discount amount not passed on, leading to a dispute over the calculation methodology.

Calculation of Excise Duty:
The Commissioner adopted a formula to calculate the duty amount based on the discount not passed on per fan for a specific period, which was then applied uniformly to all fan clearances from 1991 to 1999. The appellants contested this approach, arguing for a revised calculation method based on the total number of fans cleared during the period.

Applicability of Penalty:
The appellants sought a reduction in the penalty imposed, correlating it with the revised duty amount resulting from the corrected calculation methodology. They emphasized that the penalty should be adjusted proportionally to the reduced duty liability.

Confirmation of Demand by Commissioner:
The Tribunal found the Commissioner's formula for determining duty incorrect, as it did not consider the total fans cleared during the period under scrutiny. The matter was remanded back to the Commissioner for recalculating the duty based on the total fans cleared and adjusting the penalty accordingly.

Appeal by the Revenue:
The Revenue's appeal contended that the Commissioner should have confirmed the entire demand for a specific period due to incomplete invoice production by M/s. Crompton Greaves. However, the Tribunal dismissed the appeal, stating that proper investigation should have been conducted before issuing show cause notices, and faulted orders cannot be based on incomplete investigations.

In conclusion, the Tribunal directed a reassessment of the duty amount based on the total fans cleared, and a corresponding adjustment of the penalty. The appeal by the Revenue was dismissed due to insufficient evidence and incomplete investigation prior to issuing show cause notices.