2000 (7) TMI 131 - AT - Central Excise

Summary

Issues:
- Claim for deduction of certain amounts from the assessable value
- Admissibility of deductions on account of 'incentive scheme'
- Compliance with mandatory provisions under Rule 173C and Section 4(4)(d)(ii) of the Central Excise Act
- Provisional assessment under Rule 9B and disclosure requirements
- Interpretation of the Apex Court judgment in MRF case regarding the permissibility of deductions

Analysis:

The case involved an appeal against the rejection of a claim for deduction of certain amounts from the assessable value by the Commissioner (Appeals). The appellants, manufacturers of 'Pan Masala,' had their clearances assessed provisionally under Rule 9B of the Central Excise Rules pending verification of expenses. The dispute primarily revolved around the admissibility of deductions claimed on account of an 'incentive scheme.' The Commissioner (Appeals) found that the deductions on account of the incentive scheme were not admissible as they were not disclosed in the Annexures filed under Rule 173C, as mandated by Section 4(4)(d)(ii) of the Central Excise Act.

The appellants argued that the incentive scheme was known to dealers and distributors at the time of removal of goods, even though the disclosure was made after the goods had been dispatched. The appellants contended that the provisional assessment under Rule 9B should be treated as provisional for all purposes, allowing subsequent deduction claims. The authorities below rejected the deduction claim, emphasizing the necessity of disclosure at the time of removal.

Upon review, the Tribunal found that the incentive scheme was announced well in advance to dealers and was operational during the relevant period. Citing the Apex Court judgment in the MRF case and the Madras High Court decision in C.C.E. v. India Tyre and Rubber Co., the Tribunal held that the claim for deduction, even if not initially disclosed, could be permissible when the assessment is provisional. The Tribunal emphasized that the crucial factor was whether the dealer/customer was aware of the claimed discount at the time of goods' removal.

Consequently, the Tribunal allowed the appeal, setting aside the impugned order and granting the appellants consequential benefits under the law. The decision underscored the importance of dealer awareness of claimed deductions at the time of goods removal and the provisional nature of assessments in considering subsequent deduction claims.