1986 (4) TMI 253 - AT - Central Excise

Summary

Issues Involved:
1. Misdeclaration of discount and duty demand u/r 9(2) u/s 11A and Rule 173Q.
2. Uniformity of discount for abatement u/s 4 of Central Excises & Salt Act, 1944.
3. Time bar on the demand raised.

Summary:

1. Misdeclaration of discount and duty demand u/r 9(2) u/s 11A and Rule 173Q:
The appellants were charged with misdeclaration regarding the abatement of discount claimed in the price list for exhaust fans and air circulators. The Collector confirmed the demand for short levy of duty and imposed a personal penalty, allowing only a 15% abatement, the minimum discount uniformly given to all buyers. The appellants argued that the full discount as mentioned in the price list was split between sub-dealers and wholesale dealers based on the latter's instructions. They denied any misdeclaration or contravention of Rule 9(1) and Rule 173Q, asserting that they paid duty based on net realization, which was the wholesale price less the declared trade discount.

2. Uniformity of discount for abatement u/s 4 of Central Excises & Salt Act, 1944:
The appellants contended that Section 4 does not require uniform discount for abatement purposes, citing various case laws. They argued that the net realization was the wholesale price less the approved discount, even if part of the discount was given as commission to wholesale dealers. The SDR countered that the lower discounts allowed in some transactions resulted in higher realizations than declared, and the differential discount passed to wholesale dealers was in the nature of commission, not eligible for abatement. The Tribunal found that the appellants passed on the differential discount to wholesale dealers, indicating their involvement in sales execution. The Tribunal held that the appellants were eligible for the full discount as approved in the price list for all transactions, rejecting the Collector's view that the differential discount was sales promotion expenditure.

3. Time bar on the demand raised:
The appellants argued that the demand was time-barred, as it was raised for the period October 1974 to September 1975, with a show cause notice issued on 13-7-1982. They claimed there was no finding of intentional suppression of facts to evade duty. The SDR could not show any finding of wilful suppression. The Tribunal did not provide a separate finding on the time bar issue, as the appeal was allowed on the merits of the discount abatement.

Conclusion:
The Tribunal set aside the Collector's order, allowing the appeal and holding that the appellants were eligible for the full discount as declared in the price list for all transactions. The question of time bar was not addressed separately due to the decision on the main issue.