2007 (9) TMI 180 - AT - Central Excise

Discount given to distributor is deductible for purpose of payment of duty as distributor are not commission agents Above discount was duly declared in price list & cost of moulds received from buyers included in A.V. by assessee so demand on account of suppression is dismissed

Summary

Issues:
1. Challenge to dropping demand of duty on discount declared in price lists.
2. Challenge to dropping demand of duty on proportionate cost of moulds received.

Analysis:
1. The first issue in this case revolves around the challenge to dropping the demand of duty on the discount declared in the price lists. The appeal filed by the Revenue questions the legality of the impugned order of the Commissioner (Appeals) in dropping the demand. The grounds stated in the appeal argue that the distributor, not being the buyer of the goods, was a commission agent, and hence, the discount received should be considered as commission and not eligible for abatement from the list price. However, the Commissioner based the decision on various judicial authorities, such as Electrical Products Corporation case and Hari Chand Shri Gopal case, emphasizing that as long as the price charged was less the declared discount, the entire discount was eligible for abatement. The Commissioner found that the distributors in this case were not commission agents, and thus, the discount was correctly abated for the purpose of duty payment. The Tribunal also noted that the pattern of discount was declared in the price lists filed by the respondents with the department periodically, and the demand for short levy was hit by limitation, making the challenge unsustainable.

2. The second issue concerns the challenge to dropping the demand of duty on the proportionate cost of moulds received by the assessee. The Commissioner accepted the Chartered Accountant's certificate stating that the impugned element had been included in the assessable value. However, the appeal argued that the Commissioner should have verified whether the billing price included the amortized cost of the moulds and that the certificate did not cover certain clearances. The respondents, in their cross-objection, highlighted that the demand was time-barred as the Revenue had not proven that relevant information was suppressed with intent to evade duty payment. They also pointed out conflicting views on the includibility of the cost of moulds in the value of finished goods. The Tribunal supported the respondents' view, citing decisions in Bright Brothers Ltd. case, KK Nag Ltd. case, and CCE vs. I.T.W. Signode (India) Ltd. case. The Larger Bench decision in Mutual Industries Ltd. case also confirmed that the proportionate cost of moulds should be included in the assessable value of the goods.

In conclusion, the Tribunal dismissed the appeal filed by the Revenue and upheld the impugned order, emphasizing that the settled position on both issues supported the decision of the Commissioner.