2011 (4) TMI 905 - AT - Central Excise

Assessment of bag in box syrup (BIB syrup) - Assessee manufactures aerated water - disallowance of discount - Held that - The appellants had submitted Chartered Accountant s statements to show that during the relevant period they had actually passed on the trade discounts and even though the discounts had not been claimed in the price declaration filed by them, they had actually passed on the discount to the ultimate buyers. Since both the sides knew about the discounts and the discounts were actually passed on, the appellant was eligible for the discount. The Commissioner had seen some sample invoices and concluded that no discount had been passed on, there are no observations of the Commissioner on the submission that Chartered Accountant had verified the records and certified that the trade discount had been passed on. Further, the price declaration, the marketing pattern declaration, the invoices and the Chartered Accountant s statement which really formed basis of the whole case against the appellant has not been considered in depth and in detail. In view of the fact that the basic documents and the important submissions which go to the root of the issue, have not been considered by the Commissioner, thus the matter is required to be remanded to the Commissioner for a fresh decision - in favour of assessee by way of remand.

Summary

Issues:
Assessable value determination for BIB syrup manufactured by the appellant.

Analysis:
The case involved a dispute over the assessable value of bag in box (BIB) syrup manufactured by the appellant, who was engaged in the manufacture of aerated water. The appellant purchased soft drink concentrate from Pepsi Foods Ltd. and sugar from outside, which were mixed to create the final syrup used in the production of aerated water. The BIB syrup was sold to Pepsi Cola India Marketing (PCIM) and two independent distributors. The department contended that the distributors were not truly independent and were created to show a false wholesale price, as 98% of the product was sold through PCIM, the appellant's subsidiary. The assessable value was determined based on the prices declared by the appellant and deductions for excise duty and sales tax. The Assistant Commissioner and Commissioner (Appeals) held that the assessable value should be based on the price at which PCIM sold the BIB syrup to their buyers, including machine usage charges.

The appellant appealed to CESTAT, which held that the proviso to Section 4(1)(a) and Rule 9 of the Valuation Rules, 2000 were not applicable. CESTAT ruled that even if PCIM's price was used, the discount allowed by PCIM should be deducted to determine the assessable value. Additionally, CESTAT found that machine usage charges were for a separate activity and should not be included in the assessable value. The Supreme Court upheld CESTAT's decision. However, the department later demanded duty on machine usage charges, which was initially dropped but confirmed for BIB syrup sold to PCIM during a specific period.

During the hearing, it was found that certain documents and submissions were not considered by the Commissioner, leading to a lack of detailed analysis. The appellant had provided evidence, including Chartered Accountant's statements, to demonstrate that trade discounts were passed on to buyers, although not claimed in price declarations. The matter was remanded to the Commissioner for a fresh decision, emphasizing the need to consider all relevant documents and submissions to cover all contentions put forth by the appellant.

Therefore, the impugned order was set aside, and the case was remanded for a fresh decision on merits by the original adjudicating authority.