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TMI Blog1987 (1) TMI 250X X X X Extracts X X X X X X X X Extracts X X X X ..... rs . were not liable to duty in view of the judgment of Supreme Court in the case of A.K. Roy another v. Voltas Ltd. [1977 E.L.T. (3) 177] inasmuch as the said judgment stated that excise duty is leviable only on the manufacturing cost plus manufacturing profit. 3. The lower authorities have not accepted the contention of the appellants. 4. The appellants, keeping in view the judgment of the Supreme Court in Union of India v. Bombay Tyre International Ltd. [1983 E.L.T. 1896 (S.C.) = 1983 ECR 1627D(SC)] and further clarification by the Supreme Court reported in 1984 (17) E.L.T. 329 (SC) = 1983 ECR 223 JD (SC) with regard to trade discounts restrict their claim now only to incentive to customers and rebate to customers which they claim are nothing but trade discounts. These trade discounts, according to the appellants, were denied to them at the time of approval of the price-lists. The claims pertained to the period August 1972 to July 1973. All the claims were filed within the time limit of one year stipulated at that time in Rule 173-J read with Rule 11. The learned advocate appearing for the appellant on 11.7.1986, the date of hearing, urged that the cases be remanded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d also this Tribunal Order in case of M/s. Pure Drinks, Calcutta, No. C-117 118/85 dated 26.2.1985. He read out the relevant portion wherein the law has been clearly settled that provisions of the law are still available for filing the refund claim. We, therefore, hold that refund claims have been filed correctly under the relevant provisions of the law and there is no bar to their being considered. 6. Learned SDR, Shri Ajwani submitted that the appellants ought to have agitated the matter when their price-lists were approved at a higher value. That having not been done, the appellants are debarred from filing the refund claim. In this connection, he relied on Tribunal s order No. D-393/85 dated 4.6.1983 in the case of Aditya Mills Ltd., Rajasthan v. Collector of Central Excise, Jaipur (1983 E.L.T. 1853-CEGAT). In Para 22 of the said order it has been observed that it was for the appellants to contest the decision at the stage when they were asked to file a revised classification list. Since the appellants therein did not dispute the classification list they could not do so by means of a refund claim. 7. Learned SDR also submitted that incentive to customers cannot be trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority for determination of the amount of refund on account of trade discount claimed by the appellants, the original authority would also see whether the discount claimed by them clearly falls within the principles laid down by the Supreme Court in its clarification reported in 1983 ECR 2233D. Accordingly, it is ordered that the amount of refund claim be determined by the Assistant Collector of Central Excise concerned in the light of Supreme Court s decision in the case of Bombay Tyre International Ltd. read with the subsequent clarification referred to above. Sd/- (P.C. Jain) Member Dated : 31-7-1986. [Per : M. Gouri Shankar Murthy, Member (J)]. - I regret my inability to agree with the order proposed by my learned brother Jain. 2. It would appear from the Revision Application that the appellant had submitted in June, 1973 two price-lists bearing Nos. PL/53/73 and PL/54/73 under Rule 173-C of the Central Excise Rules (effective 19.6.1973 and 20.6.1973) [para 5 of the Revision Application]. 3. However, it was only a copy of PL/53/73 w.e.f. 19.6.1973 that was produced before us and not PL/54/73. [None of the two other price-lists filed was PL/54-73. They were i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y occurs at the extreme left hand bottom of the price-lists, rather as foot notes, but is also separated by a line in print from the columns of the price-lists. They are not separately signed or initialled for and on behalf of the appellant to indicate or imply that it was part and parcel of the price-lists. It is doubtful whether the printed portion can at all be regarded as part of the price-lists. Even if it were to be read as if it were an integral part of the price-lists, they are in direct conflict with the Nil declaration written in hand in the column relating to discount. Now, it is well settled that if there is conflict between what was written in hand in a document otherwise printed and the printed matter, then it is the hand-written matter that prevails over the printed matter as a special variation where the printed clause would be inapplicable. [See AIR 1962 Cal. 325 - and the decisions cited therein - namely (i) 1947 A.C. 46 where Lord Wright delivering the judgment of the Privy Council observed If there is any discrepancy between this printed clause and the stamped clause in the margin, the latter on ordinary principles of construction will apply ; (ii) 1893 A.C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose. If that was done, there was a strong possibility that the entire proceedings would become infructuous, due to the retirement of one of the Members of the original Bench. The representatives of both sides agreed that the specific points of difference could be formulated by the President, and they might be given the opportunity to comment on them. If this was done, both sides would undertake that they would not at a later stage question the validity of the procedure adopted in this regard. 4. The matter was taken up in Court on the appointed date. Both sides confirmed that the hearing could proceed on the basis of the points formulated by the President, which read as follows :- (1) Having regard to the declarations made by the appellants in the relevant price-lists, could their claims for refund on the basis of deductions from the declared values on account of trade discounts" be considered? (2) If the answer to question No. 1 is in the affirmative, should the cases be remanded to the concerned Assistant Collector of Central Excise for a fresh consideration of the appellants refund claims in the light of the principles enunciated by the Supreme Court in the case of Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h a copy of only one of those price-lists, namely PL/53/73. In addition, they had produced two other price-lists, effective from 7.7.1972 and 8.7.1972, which were not adverted to at all in the revision application. 8. After obtaining instructions from his clients, Shri Lakshmikumaran clarified that price-lists Nos. PL/53/73 and PL/54/73 had been submitted to the Excise authorities but had been returned by them with some objections, under a fetter dated 13.6.1973 from the Superintendent. The copy of price-list PL/53/73 was not therefore an approved price-list. In view of this, Shri Lakshmikumaran stated that he would not base his arguments on the copy of PL/53/73 which had been filed before the tribunal. 9. Shri Lakshmikumaran stated that the copies of the other two price-lists, effective from 7.7.1972 and 8.7.1972, had been filed before the original Bench, in compliance with the desire of that Bench to see some typical price-lists. The compilation of papers filed under the letter dated 4.6.1986 of the advocates for the appellants is referred to for convenience as the Additional Papers . The two price-lists in question are at pages 15 and 16 of the Additional Papers. For conv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Shri Lakshmikumaran, therefore, submitted that there was a clear indication in the handwritten declaration in the price-lists that certain trade discounts for sub-standard fabrics were given. 11. Shri Lakshmikumaran also drew attention to another printed note (B) at the bottom of the price-list form. This was headed Quantitative Trade Discount allowed on bulk orders booked . According to this note, if the order booked for all suiting qualities totaled together was from 1000 to 2999 metres-(2499 metres for one quality), the quantitative trade discount (Q.T.D. for short) was 3%. For 3000 metres (or 2500 metres) and above it was 5%. Shri Lakshmikumaran submitted that by virtue of this note (B) it should be considered that the appellants had duly declared in their price-list the quantity discounts given by them. 12. Shri Lakshmikumaran referred to a contract dated 15.11.1972, of which copies had been filed (vide pages 5-6 of the Additional Papers). This was a contract between the appellants and a wholesale buyer, M/s. N. Popatlal Sons. The goods were described as K 64" and the quantity as 15,000. metres. On the face of the contract, there was a handwritten endorsement 5% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assistant Collector s Order-in-Original. In Para 3(2), the Assistant Collector had set out the pleas made by them in support of their claim for refund. He had recorded that the appellants had claimed selling expenses in respect of only the following Items :- Salary wages, advertisement expenses, bank charges, business promotion expenses. travelling expenses, commission to selling agents, brokerage to selling agents, incentive to customers and rebate to customers .\ The Assistant Collector had disallowed the claim on the basis of various judgments. He had not raised the point that the refund claim was inadmissible because an appeal should have been filed against the approval of the price-list. In the Appellate Collector s order also no such objection had been taken. 14. It was pointed out from the Bench that there was an observation to that effect in Para 4 of the Appellate Collector s order. The Appellate Collector had observed :- The refund claimed is not against, any invalid order of the assessment but is claimed as relief under voltas judgment. Assuming that the Supreme Court in the voltas case has made a declaration of new law on the construction of Section 4(a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the basis of the reformulation of the first point, Shri Lakshmikumaran s attention was drawn to the wording of the 11 refund claims, each covering a period of one month, from September, 1972 to July, 1973. (From the Appellate Collector s order it is seen that there were 12 refund claims, from August, 1972 to July, 1973. The set of papers filed by the appellants on 22.7.1986 and referred to as the Second Paper Book does not contain a copy of the refund claim for August, 1972. However, it is common ground that all the 12 claims were similar in material respects). It was pointed out that in each case the refund,was claimed on account of excise duty paid during the month of due to inclusion of selling expenses (inadvertently) in the value of goods .....". In the earlier claims the word inadvertently was not present. It appears in the later claims for the periods from I December, 1972 onwards. Shri Lakshmikumaran s comments were invited on the question whether the case now being argued for refund on the basis of admissibility of quantity discounts was consistent with the nature of the claim as put forward in the respective refund claims. 17. In reply, Shri Lakshmikumaran too ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to customers covered a 2% discount allowed for cash payment. Shri Lakshmikumaran added that in a recent judgment dated 20.12.1986 in a case relating to Madras Rubber Factory, the Supreme Court had confirmed the admissibility of cash discounts for exclusion from the assessable value. 20. Shri Lakshmikumaran submitted that the refund claims in question had all been filed after the letter dated 5.7.1973, and accordingly they should be read with that letter. In that letter a reference had also been made to the appellants previous letter dated 15.2.1973 to the Superintendent, Modinagar (Annexure A to the revision application). As already mentioned by him earlier (vide Para 13 supra), that letter contained an explanation of their pricing pattern and there was a specific statement that the pattern of discounts allowed by us is being mentioned in the price-list submitted by us from time to time . 21. Shri Lakshmikumaran therefore reiterated that the ground for the refund claim was not a new one and therefore, should be taken into account. 22. Without prejudice to these requirements, Shri Lakshmikumaran submitted that even if it was considered that the refund claim was sought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en made on the ground of wrong classification. Subsequently, the applicant might, wish to give up the ground of wrong classification but pursue the claim on the basis that some goods had been short-landed. On the basis of the authorities cited, could it be contended that the claim should be allowed to be amended, with effect from the date is its filing? 26. Shri Lakshmikumaran s reply was that an amendment on the basis of new facts, such as would be involved in the above hypothetical case, might not be permissible. But if the amended claim could be sustained on the basis of the same facts and records on which the original claim was based, the amendment should be allowed. In this connection, he referred to the provisions of Section 11B(3) of the Central Excises and Salt Act. 27. On a point of clarification, the Bench pointed out to Shri Lakshmikumaran that reference had been made to certain contracts with wholesale dealers, providing for discounts of 2% and 5% (vide Para 12 supra). It had been stated that the Q.T.D. referred to in these contracts was the same as had been referred to in the footnotes to the price-list. It was further observed that whereas the Q.T.D. as show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd on which Shri Lakshmikumaran had relied were for standard goods. This could be seen from Para 3 of the terms of contract, which read that the quality of goods shall in all cases, accord with the recognised standard quality of such goods manufactured by the company . Further, it could be seen that the quality numbers shown in the two contracts did not tally with any of the quality numbers mentioned in the description column in the two price-lists. Accordingly, the two contracts produced had no relation to the price-lists and could not be relied upon for interpreting them. 33. Shri Ajwani submitted that the printed footnotes to the price-list covered all possibilities. Those not applicable were required to be scored out. This however had not been done by the appellants. Note (C) relating to submission under protest was clearly inapplicable, but it had not been struck out. In such circumstances writing by hand would supersede a printed Entry, as observed by Member, Shri Murthy. 34. Shri Ajwani submitted that in any event the quantity discounts shown in footnote (B) were only for sub-standard goods and not standard goods, in view of the first printed note in the form vide Par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In Para 13 to 16 of its order, the Tribunal had held that since the sale price had already been paid at the time of purchase and the bonus discount was determined after the end of the year, it could not be termed as trade discount. It was a sort of reward or gift of incentive for promoting sales, or a contingent concession dependent on the basis of the purchased turnover or performance. The Bench had taken note of the clarification [1984 (17) E.L.T. 329 SC = 1983 ECR 2233] of the Supreme Court of its main judgment in the case of Bombay Tyre International, on which clarification Shri Lakshmikumaran had relied. The above decision of the Tribunal was applicable to the present case. (Though that case before the Tribunal was not under the old Section 4, the Supreme Court had clarified that the basic interpretation would be the same for the new Section 4). The deduction claimed by the appellants in the present case had been described by them as incentive to customers . This also was contingent of performance, and either a part of it or the whole of it was given only at the end. 39. Referring to Para 3 of the Order-in-Original, Shri Ajwani submitted that the so-called incentive was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd to the Assistant Collector was for a fresh consideration of the appellants refund claims as per law . 45. With reference To the submissions of Shri Lakshmikumaran at the resumed hearing, Shri Ajwani submitted that the modification of Question No. 1 did not affect his earlier submissions. Any refund claim had to have a basis. In the present case, the basis was the price-list. As already submitted by him, there was nothing in the price-lists to support a claim for refund. 46. On the basis of the appellants letter dated 5.7.73, it had been argued that the refund claims arose out of the Supreme Court judgment in the Voltas case. According to Shri Ajwani, that judgment related to the exclusion of P.M.E. (post manufacturing expenses). The concept of trade discounts which were to be excluded from the assessable value was already known and accepted even prior to the Voltas judgment. 47. Shri Ajwani referred to the Assistant Collector s order. In Para 2 it had been mentioned that the appellants had been given a notice to show cause why their claim should not be rejected on the ground that the assessments had been made on the wholesale cash price declared and charged by the mil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of applying that judgment would not arise so far as the scope of the present Bench was concerned. 51. When Shri Lakshmikumaran started his reply, he was asked by the Bench whether the original carbon copies of price-lists PL. 7 and PL. 8 were available, since these might contain writing in ink which had not come out on the photocopies. Shri Lakshmikumaran had the carbon copies, which were seen by the Bench and by Shri Ajwani. Apart from the endorsements appearing in the photocopies they did not contain any other writing. 52. Shri Lakshmikumaran submitted that the present hearing was not an appeal from the decisions of the two Members constituting the original Bench. Those Members had not given any finding on the question whether the incentive and rebate were trade discounts. It would not be proper for the present Bench to give any finding on this question. 53. As regards Shri Ajwani s submission (para 15 supra) that silence does not mean consent , Shri Lakshmikumaran disagreed. Since Member Shri Murthy had not specifically disagreed with the finding of Shri Jain, his disagreement could not be presumed. 54. The Bench pointed out to Shri Lakshmikumaran that disagreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lude a quantity discount, Shri Lakshmikumaran submitted that a deferred discount meant a payment by the manufacturers linked with increased purchases from them. It could accordingly be considered as selling expenses . 61. Shri Ajwani had referred (para 38 supra) to the case of Orient General Industries. The present case could be distinguished. In that case the incentive bonus had relation to the level of purchases in the previous year. A lump sum was paid by the manufacturers to the dealers if they exceeded the target based on the performance of the preceding year as fixed by the manufacturers. It was a payment of that nature which was held to be inadmissible. In the present case the facts were different, because the Q.T.D. was based on performance under the contract. 62. Shri Lakshmikumaran referred to the judgment of the Supreme Court in the case of Moped India Ltd., reported in 1986 (23) E.L.T. 8. In that case what was at issue was called a commission . It was held by the Supreme Court that the amounts described as commission were clearly trade discount liable to be excluded from the assessable value. The Supreme Court clarification reported in 1986 ECR 2233 was clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e therefore submitted that the question before the Bench should be answered in the affirmative as already proposed by him (vide Para 15 supra). 69. I have carefully considered the points at issue, in the light of the orders proposed by the learned Members, the authorities relied upon by them and the arguments advanced before me by the learned representatives of both sides. In considering the answer to the two questions posed, the following aspects would require consideration:- (1) the respective classification lists having been approved on the basis of the declarations of the appellants, and no appeals having been filed against the approvals of those classification, lists, could they in effect seek to revise the declarations in and approvals of the classification lists by filing refund claims in relation to specific assessment? (2) could the declarations in the classification lists submitted by the appellants be read as indicating that approval was sought for allowing specified quantitative trade discounts (Q.T.D s)? (3) could the Q.T.D. s or quantity discounts be regarded as covered by the expression selling expenses ? and if not, (4) could refund on the basis of allowi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take notice that if the declaration of rate of duty or value in a classification list or price-list is not approved as claimed by the assessee, the latter is free to go up in appeal against that decision. 75. It is also a fact of which notice can be taken that the R.T.12 returns furnished by the assessee are subsequently scrutinised and finalised by the Central Excise Department with reference to the approved classification lists and price-lists. 76. Under this scheme, it can legitimately be expected that an assessee whose declaration of classification or value is approved only with modification by the proper officer (which in effect means it is not approved) would seek a modification of that officer s decision. We can take note that this is actually being done in a large number of cases. 77. The question could then arise as to what would be the purpose of Rule 11 or Section 11B in such circumstances. If the assessee has either to challenge the approval of the classification list or price-list, or abide by those approvals, what is the use of a provision giving him the right to claim refund of duty (which could be on the ground of incorrect classification or valuation) within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rges is that an assessee who does not agree with a decision on a classification list or a price-list can challenge it directly by appealing against that decision and not indirectly by filing a refund claim on an assessment based on that decision. In taking this view, it will be seen that no provision of the Central Excises and Salt Act and Rules is rendered redundant, not in there any apparent illogicality or injustice in their application. It is for the assessee to make his declaration or classification (including rate of duty) and value. If his declaration is not accepted in toto, but approved with some modification, it is open to him to appeal against such modified approval, and in the meantime to make effect clearances on the basis of the modified approval. (Section 11B(1) refers also to payment of duty under protest. In such cases, the making of a protest may be superfluous, in view of Section 11B(3), but there could be other types of claims where it would be necessary). If subsequently the assessee considers that duty has been paid in excess, even on the basis of the approved price-list or classification list, he can make a refund claim on that basis, within the prescribed li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Collector s decision on the price-list, but the price-list was approved by the Assistant Collector without any modification. 83. The order of a two-Member Bench of the Tribunal in another batch of cases of the present appellants in which the above cases find mention, does not contain any independent discussion of the issue and therefore does not require separate consideration. 84. As against the abovementioned cases, there is the case of Aditya Mills Ltd., Rajasthan, relied upon by the SDR (1983 E.L.T. 1853). In that case a three-Member Bench of the Tribunal observed as under:- We also do not find any merit in the contention that the procedure of Rule 173B was not observed because it was for the appellants to contest the decision at that stage when they were asked to file a revised Classification List. The Assistant Collector is right in observing that since they did not dispute the Classification List, they could not do so by means of a refund claim". The learned Member Shri Jain has considered this as in the nature of a passing observation. However, it cannot be said to be a casual observation or one without weight. As a matter of interest, it may be seen that one of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the mention of trade discounts and specific figures were given (vide Para 10 supra). Further, the printed footnotes at the bottom of the price-list form, specifying various Q.T.D s should be taken into account. 87. On this point again, I am in agreement with the views of Member Shri Murthy. The learned Member had taken note of the fact that reference was made in the price-list to certain discounts for sub-standard goods. There is a reference in the price-list to trade discount , but under this are the discounts allowed for sub-standard fabrics. If at all these entries prove anything, it is that the appellants were aware that trade discounts were eligible for exclusion from the assessable value. No doubt there were printed footnotes at the bottom of the form, but these were comprehensive footnotes meant to be retained or deleted according to need. Thus footnote (C) reads we are submitting it under protest as we want to clear the goods on contract prices . This note had obviously no relevance to these price-lists, as the appellants did not in fact follow up their protest . If the appellants wanted to save trouble or space by printing the particulars of specific discounts, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation in their letter of 5.7.73 regarding their selling expenses , and this was directly relevant to their claim that these were post manufacturing expenses and should be excluded from the assessable value. But for considering their case for exclusion of quantity discount (or as now mentioned, cash discount), much more has to be done. It would be necessary to link up the quantum of these discounts with the amounts shown as incentive to customers and Rebate to customers . Even on the basis of the representative documents filed (e.g. the two price-lists PL. 7 and PL. 8 and the contracts with M/s. N. Popatlal and M. Kumar Co.) there are some obvious discrepancies, which have been pointed out in Para 27 supra). Clearly, even if it was possible for the appellants to make out a convincing case that the Q.T.D. was in fact the amount of quantity discount allowed to customers, and that it was equal to the amount shown as incentive to customers , this could only be done by submitting a considerable amount of fresh material. The appellants cannot therefore benefit from the decision of the Tribunal in the case of Premier Tyres Ltd. (para 22 supra) or the judgments on which the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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