2015 (10) TMI 2396 - AT - Central Excise

Determination of correct assessable value - Inclusion of commission paid and discounts given - Whether for the period prior to 1.7.2000 when the price on which the goods are generally sold is the correct assessable value or not - Held that - As the issue has been settled by Hon ble Apex Court in the decision of Elgi Equipments Ltd. (2007 (8) TMI 20 - SUPREME COURT OF INDIA), therefore we hold that price at which goods have been ultimately sold to M/s. PDV shall be the assessable value. In these terms, demands for the period January, 1986 to August, 1987 as confirmed by way of impugned order is set aside. Further, we hold that for the period September, 1987 to November, 1988, the price at which the M/s. RMPL sold the goods to M/s. PDV is the assessable value. In these terms, we have decided the assessable value. As there were no malafide on the part of M/s. RFI for short payment of duty, the penalty is not imposable. - in this case, penalty of ₹ 25,000/- has been imposed on M/s. RMPL. As M/s. RMPL is an artificial person and in the facts of circumstances of the case, malafides against M/s. RMPL are not stand proved as they have conceded that the price at which M/s. RMPL sold the goods to M/s. PDV is the correct assessable value. - Decided in favour of assessee.

Summary

Issues:
1. Assessable value determination for goods sold to distributor and related parties.
2. Imposition of penalty on artificial person.

Assessable value determination for goods sold to distributor and related parties:
The case involved M/s. Rewa Fans Industries (RFI) appealing against the demand of duty confirmed and penalty imposed, and M/s. Ravi Marketing Pvt. Ltd. (RMPL) appealing against the penalty imposed under Rule 209 A of the Central Excise Rules, 1944. The dispute centered around the inclusion of commissions given to M/s. P D Vyas & Co. (PDV) in the assessable value during the periods of January 1986 to August 1987 and September 1987 to November 1988. The Revenue contended that the commissions and discounts should be included in the assessable value. The Tribunal observed inconsistencies in the show cause notice and impugned order regarding the role of PDV as a commission agent. The Commissioner (Appeals) held that the assessable value should be based on the price charged after discount for goods sold to PDV as a sole distributor, and the price at which goods were directly sold to consumers. The appellant argued that the assessable value should be the price at which goods were sold, citing the decision in Elgi Equipments Ltd. vs. CCE, Coimbatore [2007 (215) ELT 348 (SC)]. The Tribunal, referring to the Elgi Equipments Ltd. case, held that the price at which goods were sold to PDV and RMPL should be the assessable value for the respective periods, setting aside the demands for the earlier period and confirming the assessable value for the later period.

Imposition of penalty on artificial person:
Regarding the penalty imposed on RMPL, the appellant contended that penalties should be imposed on real persons, not artificial entities. The Tribunal found no malafide intent on the part of RFI for duty underpayment, thus ruling out the imposition of penalty. As RMPL had acknowledged the correct assessable value, the Tribunal set aside the penalty imposed on RMPL. The Tribunal concluded by disposing of the appeals accordingly, setting aside penalties and determining the assessable value based on the prices at which goods were sold to the relevant parties for the respective periods.