2003 (7) TMI 234 - AT - Central Excise

Valuation (Central Excise) - Refund claims for excess Central Excise duty - payment of duty at the time of clearance of the goods from the factory - HELD THAT - The credit notes issued on a monthly basis were the result of settling of rate. We are therefore of the opinion that lower authorities have not rightly understood the nature of transaction that sale price was provisional at the time of original removal of the goods and was subsequently settled by issue of credit notes. They were in error in holding that price was known at the time of removal and issue of credit notes only indicated post-sale revision of prices. According to Section 4 of the Central Excise Act in a case of sale of goods the transaction value is to constitute the assessable value. The appellant s transactions with their dealers are clearly cases of sale and that transaction value is the value determined after issue of credit notes. The account of each dealer is settled every month at the rate discounted by the credit note amount. There was no further amount paid or payable over and above that net amount. Therefore the discounted amount net of the credit note was required to be treated as assessable value. Since original payment of duty was based on amounts higher than the transaction value the appellant was rightly eligible for refund of duty paid on the excess amounts. Since the credit notes indicated not only revised prices but also Cenvat amounts there could also be no question of the appellant passing on higher amount of excise duty to the buyers. Both price and duty were settled taking into account credit notes. All payments both price and duty were net of credit note amounts. Thus the appeal is allowed with consequential relief to the appellant.

Summary

Issues involved: Refund claims for excess Central Excise duty based on sales price and validity of credit notes issued to dealers.

Summary:
1. The appellants, manufacturers of Flat Glass, filed refund claims for excess Central Excise duty paid on clearances from July to November, 2000. The impugned orders rejected the refund applications, stating that original duty payment at the time of clearance was based on sales price, and no excess duty payment occurred due to credit notes issued to dealers post-sales.

2. The appellants argued that they followed a practice of fixing a uniform price for goods cleared to dealers, with subsequent discounts based on monthly assessments. Credit notes were issued to dealers reflecting the discounted net price, which was considered the actual sale price. Accounts were settled monthly based on these net prices.

3. During the hearing, the appellant's Counsel referred to Section 4 of the Central Excise Act, asserting that the net amount after credit notes constituted the transaction value, not the invoice amount at the time of goods removal. They emphasized that discounts should be considered in determining assessable value, citing relevant case law.

4. The SDR contended that sale prices were known at the time of goods removal, and subsequent credit notes did not affect Central Excise duty assessment. Referring to Section 4(3)(d) of the Act, the SDR argued that transaction value is the price at the time of sale, as indicated in the invoices.

5. The Tribunal observed that monthly issuance of credit notes and settlement of accounts based on net amounts indicated that prices were not fixed at the time of goods removal. The provisional nature of prices in invoices was acknowledged by both parties, with credit notes reflecting the final rates. Therefore, the discounted amount after credit notes was deemed the assessable value, making the appellant eligible for duty refund.

6. Consequently, the appeal was allowed, granting relief to the appellant.