2018 (8) TMI 1082 - AT - Central Excise

Valuation - includibility - The case of the department is that the discount shown in the invoice is towards freight, therefore the same is not deductible from the assessable value - Held that - The appellant have admittedly shown the amount of discount in the sale invoice and the same has been passed on to the customer. In this fact, the deduction of discount is permissible in terms of Section 4 of Central Excise Act, 1944 - no duty can be demanded on such discounted amount - demand set aside. MODVAT/CENVAT credit - Capital goods - video control cabinet for injection moulding machine - Held that - Even as per the use there is no dispute that it is used an accessory to injection moulding machine, therefore, even though the said goods is excluded in serial No. 2 of table annexed to the definition of capital goods, but it is included in the serial No. 5 as component parts and accessories of the machine falling under serial No. 1 to 4 irrespective of any chapter heading. Therefore, the video control cabinet being an accessory of injection moulding machine which falls under 8477 and the same is covered by serial no. 2, the credit on video control cabinet is admissible - credit allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Deduction of discount shown in the sale invoice from the assessable value.
2. Admissibility of Modvat credit on video control cabinet for injection moulding machine.

Analysis:

Issue 1: Deduction of discount from assessable value
The appellant supplied goods on FOR Basis and showed a discount on the sale invoice. The department contended that the discount was towards freight and not deductible from the assessable value. The appellant argued that the discount was passed on to the customer and should be deducted as per Section 4 of the Central Excise Act, 1944. The appellant's counsel referenced a Supreme Court case to support the deduction of freight as permissible. The Tribunal agreed with the appellant, stating that the discount was permissible under Section 4 and even if considered as freight, it was deductible based on the Supreme Court precedent. Therefore, no duty could be demanded on the discounted amount.

Issue 2: Admissibility of Modvat credit on video control cabinet
The appellant claimed Cenvat credit on the video control cabinet as a capital good under Rule 57Q of the Central Excise Rules, 1944. The department argued that the cabinet fell under a chapter heading excluded from the definition of capital goods. The appellant contended that the cabinet was an accessory to the injection moulding machine and thus eligible for credit under a different serial number. The Tribunal examined the bill of entry and found that the cabinet was indeed used as an accessory to the machine. Despite being excluded in one serial number, it was included in another category for component parts and accessories, making it eligible for credit. Consequently, the Tribunal set aside the impugned order, allowed the appeal, and ruled out any penalty on the director of the appellant company.

This judgment by the Appellate Tribunal CESTAT AHMEDABAD, delivered by Mr. Ramesh Nair and Mr. Raju, addressed the issues of discount deduction from the assessable value and the admissibility of Modvat credit on a video control cabinet in a detailed and comprehensive manner, providing legal reasoning and referencing relevant case law to support its conclusions.