2011 (6) TMI 659 - AT - Central Excise

Stay - Cash Discount/Prompt Payment Discount - Quantity Discount - allegation of the department that the Cash Discount/Prompt Cash Discount and Quantity Discount; which were claimed by the appellant, have not been passed on by them to their buyers Held that - appellant as per their Quantity Discount Policy, had fixed the rates of quantity discounts based on the quantity purchased by a customer during a month and accordingly, the quantum of Quantity Discount available to a customer was being determined at the end of the month and at that stage, the discount was being passed on by issuing a credit notes to the customers and to that extent, the amount was being deducted from the total assessable value. Just because the quantity discount was not being mentioned in the individual invoices during the month, the same could not be denied, requirement of pre-deposit of duty demand, interests and penalty is waived, stay applications are allowed

Summary

Issues:
- Alleged short payment of duty
- Provisional assessment requirement
- Imposition of penalty under Rule 25 of the Central Excise Rules, 2002
- Appeal against orders of Addl. Commissioner and Commissioner (Appeals)
- Stay applications seeking waiver from pre-deposit requirement

Alleged Short Payment of Duty:
The appellants, manufacturers of Asbestos products containing fly ash, availed partial duty exemption under Notification No. 5/2007-C.E. They sold products directly to stockists, dealers, and consignment agents. The department alleged short payment of duty amounting to Rs. 24,49,363/- and Rs. 22,19,715/- for not paying duty on the correct transaction value. The department also claimed that provisional assessment should have been done during the disputed period. Orders-in-original confirmed duty demands, interest, and imposed penalties under Rule 25 of the Central Excise Rules, 2002. Commissioner (Appeals) upheld these orders.

Provisional Assessment Requirement:
The appellant had informed the jurisdictional Asstt. Commissioner about allowing Quantity Discount to customers based on quantity lifted monthly, which was determined at the end of the month. The appellant requested provisional assessment due to the difficulty in determining the discount amount beforehand. The department, however, informed them that provisional assessment was not necessary. The tribunal noted that the appellant disclosed the entire discount policy to the department, and the allegation of not going for provisional assessment lacked basis.

Imposition of Penalty under Rule 25:
Penalties under Rule 25 of the Central Excise Rules, 2002 were imposed by the Addl. Commissioner for contravention of Rule 4 & 6 read with Section 4 of the Central Excise Act. The Commissioner (Appeals) upheld these penalties. However, the tribunal found that the appellant had a strong prima facie case as the discounts were passed on to buyers, and there was no short payment of duty. Therefore, the requirement of pre-deposit of duty demand, interest, and penalty was waived for hearing the appeals.

Appeal against Orders:
The present appeals were filed against the orders of the Addl. Commissioner and Commissioner (Appeals). The tribunal carefully considered submissions from both sides, finding that the discounts claimed by the appellant were passed on to buyers. The tribunal noted that the appellant's Quantity Discount Policy was disclosed to the department, and the appellant had initially sought permission for provisional assessment. As there was no short payment of duty, the tribunal allowed the stay applications, waiving the pre-deposit requirement and staying recovery until the disposal of the appeals.

This comprehensive analysis of the judgment highlights the issues of alleged short payment of duty, the provisional assessment requirement, imposition of penalties, the appeal process, and the decision to waive the pre-deposit requirement for the appeals.