2015 (8) TMI 1291 - AT - Central Excise

Reference of constituting a five Member Bench - Valuation - deduction of cash discount - Held that - Considering the submissions of both the sides and particularly that there is no need to refer the matter to five Member Bench in view of the Hon ble Supreme Court decision in the case of CCE Pune v. SKF India Ltd. (2009 (7) TMI 6 - SUPREME COURT ) we decline to answer reference as to whether it is necessary to refer the matter to five Member Bench or otherwise. The appellant is at liberty to pursue the appeal before the learned Division Bench on merit and other issues to canvass all points on the basis of binding decisions. Registry is directed to place the matter before regular Bench for appropriate order.

Summary

Issues involved: Conflict of opinion between Larger Benches regarding cash discount deduction from assessable value, necessity of referring the matter to a five Members Bench, demand of duty, interest, and penalty on cash discounts not passed on to buyers.

Conflict of opinion regarding cash discount deduction:
The case involved a conflict of opinion between two Larger Benches of the Tribunal regarding the deduction of cash discounts from the assessable value of goods. The appellant, engaged in the manufacture of Float Glass, offered cash discounts to customers for prompt payment. The issue arose when the appellant stopped paying duty on discounts not availed by buyers after a Larger Bench decision in the case of Arvind Mills Ltd. held that cash discounts were deductible from the assessable value, regardless of whether the buyer availed them or not. However, another Larger Bench decision in the case of Lucas TVS Ltd. disagreed with this interpretation, leading to confusion.

Necessity of referring the matter to a five Members Bench:
The Tribunal, faced with conflicting decisions, referred the matter to a three Members Bench to determine whether it needed to be escalated to a five Members Bench for resolution. The appellant's advocate argued that a five Members Bench might not be necessary, citing a Supreme Court decision in the case of CCE, Pune v. SKF India Ltd., which suggested that such a reference may not be required. The advocate contended that the appellant should be entitled to relief from the demand of duty, interest, and penalty based on other binding precedent decisions.

Decision and outcome:
After considering the arguments from both sides and the Supreme Court decision, the Tribunal declined to answer the reference on whether to refer the matter to a five Members Bench. The appellant was given the liberty to pursue the appeal on its merits and other issues before the regular Bench. The decision was based on the belief that the matter could be resolved based on existing binding decisions without the need for further escalation.

This judgment highlights the complexities that can arise when conflicting decisions exist within the legal framework, requiring careful consideration and interpretation to ensure fair and just outcomes for all parties involved.