2016 (9) TMI 1235 - AT - Central Excise

Demand and imposition of penalty - cash discount granted on the chassis cleared on payment of duty - non-inclusion of the amount of freight, insurance and octroi paid on the chassis received by it from M/s.Tata Motors in arriving at the assessable value on which the duty was paid by it - Held that - the goods namely chassis were received by the appellant from M/s. Tata Motors Ltd. under proper central excise invoices and central excise duty paid thereon was clearly mentioned in those invoices. The appellant merely took credit of the duty so paid by M/s. Tata Motors Ltd. Therefore, if there is any discount allowed by M/s. Tata Motors Ltd. which the Revenue was of the view was not admissible then it follows that the demand should have been raised on Tata Motors, which had paid duty on chassis after allowing such discount. Regarding non-inclusion of freight, insurance and octroi in respect of such chassis supplied by Tata Motors in arriving at the assessable value of the final product by the appellant, we find that Chartered Accountant s Certificate dated 01.06.2007 was submitted by the appellant to the effect that cost of transportation, insurance, road tax, entry tax, octroi etc. upto the place of the consignee was included on the average basis in the assessable value of the final product of M/s. Tata Motors Ltd. and that such assessable value is used for payment of duty of excise at the time of removal of finished goods from Lucknow plant. Notwithstanding the C.A. Certificate to support the appellants contention, we find that in the impugned order it is stated that it also appeared that M/s.Tata Motors Ltd. has not considered other elements such as freight, insurance, entry tax to arrive at the assessable value of the chassis for discharging duty. That being the case, the duty demand in respect of such elements even if they were held to be includible in the assessable value can be raised on M/s. Tata Motors and not on the appellant. Further there is nothing on record to suggest that the appellant paid anything more than the amount mentioned in the Tata Motors invoices. In other words, the appellant has not paid any freight, insurance or octroi in respect of such chassis, and therefore, question of the appellant adding these elements in arriving at the assessable value of its final products would simply not arise. Also when the impugned demand is not found sustainable, the penalty obviously cannot survive. - Decided in favour of appellant

Summary

Issues:
- Central Excise duty on cash and special discounts
- Central Excise duty on Cenvat Set Off
- Central Excise duty on assessable value components
- Penalty imposition under Section 11AC of the Central Excise Act, 1944

Central Excise duty on cash and special discounts:
The appeal challenged an Order confirming Central Excise duty on cash and special discounts not paid by the appellant. The Tribunal noted that the duty was confirmed due to cash discounts granted on chassis cleared by M/s. Tata Motors, which were deemed inadmissible. However, the Tribunal observed that if discounts were not admissible, the demand should have been raised on Tata Motors, who paid duty after allowing such discounts. The appellant argued that the discounts were similar to those offered to other buyers and contended that they did not incur any additional costs like freight or insurance. The Tribunal found that the appellant only took credit for duty paid by Tata Motors, and the demand should have been on Tata Motors if discounts were not permissible.

Central Excise duty on Cenvat Set Off:
The Tribunal addressed the demand component related to the Cenvat Set Off amount, which was dropped as it had been passed on after payment of duty. The appellant's contention that they did not include freight, insurance, and octroi in the assessable value was examined. Despite a Chartered Accountant's Certificate supporting the inclusion of these costs in the assessable value, the Tribunal found discrepancies in M/s. Tata Motors' valuation process. It was concluded that any duty demand related to these elements should be raised on Tata Motors, not the appellant, as the appellant had not paid additional costs beyond those mentioned in Tata Motors' invoices.

Penalty imposition under Section 11AC:
The Tribunal imposed a penalty under Section 11AC of the Central Excise Act, 1944. However, since the demand on the Central Excise duty was not sustainable, the penalty was deemed unjustified and could not stand. Citing a Supreme Court judgment, it was established that disputes regarding classification or valuation should involve the party that classified or valued the goods and paid duty, not the recipient. Consequently, as the impugned demand was found unsustainable, the penalty was set aside, and the appeal was allowed.

This comprehensive analysis of the judgment highlights the issues related to Central Excise duty on various components and the subsequent penalty imposition, ultimately resulting in the appeal being allowed due to the unsustainable nature of the demands and penalties.