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TMI Blog2019 (1) TMI 908X X X X Extracts X X X X X X X X Extracts X X X X ..... of the wholesalers in terms of Section 14 of the Customs Act, 1962. Whether the 3 SCNs under consideration are barred by limitation? - Held that:- The appellants have been regularly filing their monthly ER-1 Returns indicating the quantities of computers manufactured and cleared every month, the details of invoices raised during the said month and the total value of clearances affected during the month in question. Department has already issued a SCN dated 26.03.2001 for the period April 1999 to Sept. 2000 to the appellants for the very same issue - when the Department is quite aware of the activities of the appellants, no suppression, nonetheless of a material fact with intent to evade payment of duty can be alleged - the SCNs are barred by limitation. Matter remanded back to the Original Authority for confirmation of duty for the normal period. - E/503/2007, E/1045/2009, E/885/2011 - Final Order No.20055-20057/2019 - Dated:- 17-1-2019 - MR. S.S GARG, JUDICIAL MEMBER And MR. P. ANJANI KUMAR, TECHNICAL MEMBER Shri G. Shivadass and Mr. Syed Peeran, Advocate, V. lakshmikumaran V. sridharan For the Appellant Mr. Madhup Sharan, Asst. Commr., AR For the Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellants was rejected by the Hon ble Supreme Court in 2004 (167) ELT A-137 (SC). 3. Learned counsel for the appellants has based his arguments on the following: 3.1. Earlier decision of Apex Court in their own case is not applicable to period after 01.07.2000 when new valuation rules have come into force by introducing the transaction value as per which only those amounts which are charged are recovered from the buyer are liable to the added to the price paid or payable to arrive at the transaction value. He also submitted that the above decision was rendered not only under the old valuation rules but also the wordings of the agreements were altogether different as seen below: Agreement prior to 01.04.2001 C. Remuneration HP will remunerate Re-seller for this service with an additional discount of 1% already included upfront in re-seller s discounts. Failure to comply with any of the requirements will entitle HP to remove the additional discount on future orders. In view of the above, the Hon ble Tribunal held that discount cannot be equated to remuneration etc. which are not allowed to be deducted from the assessable value. However, subsequently, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngrafts the additions to the normal price under the old Section 4 as held to be permissible in the case of M/s. Bombay Tyre International Ltd. He also submitted that the term paid or payable has been interpreted by the Hon ble Supreme Court in the case of Purolator India Ltd. Vs. CCE, Delhi-III, 2015 (323) ELT 227 (SC) stating that The expression actually paid or payable for the goods, when sold only means that whatever is agreed to as the price for the goods forms the basis of value, whether such price has been paid, has been paid in part, or has not been paid at all. The basis of transaction value is therefore the agreed contractual price. The same understanding was given by Hon ble Supreme Court in the case of CCE, Mysore Vs. TVS Motors Co. Ltd. 2016 (331) ELT 3 (SC) which approved the decision of Bombay High Court in the case of Tata Motors Ltd. Vs. UOI, 2012 (286) ELT 161 (Bom.). The above decision has been continuously held by the Tribunal in the following cases while dealing with additional charges: (i) Luminous Electrical Pvt Ltd. Vs Commissioner of C.Ex. Delhi, 2016 (338) ELT 154 (Del.). (ii) Ford India Pvt Ltd. Vs Commr. of C.Ex. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction value; as per amendment to Section 14, transaction value for the sale of goods is to be adjusted by specifically adding to the price paid or payable for the goods any expenses incurred by the buyers towards costs and services. The Ld. counsel further submitted that the intention of the parties to the agreement is to provide discount and that no service is rendered by the Re-sellers if the parties to the contract agree that a particular amount is a discount then it is so and is not open to a different interpretation by the Department in the absence of any evidence showing a different intention. In all the statements recorded by the Department, the officers and dealers of the appellants categorically stated that it was only a discount as mentioned in Clause 2B of the Agreement. He further submitted that in any case, the alleged service by the Re-sellers is a post-sale activity. 3.5. The Commissioner (A) has upheld the invocation of longer period by the Department on the ground that the appellants had changed the name of additional discount given in the present agreement and this fact was not brought to the notice of the Department. It is submitted that Commissioner (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cutta-II 2000 (119) ELT 650 (Tri.). 5. Heard both sides and perused the records of the case. Brief issues that needs to be decided in this case are as below: (i). whether the additional discount of 1% provided by the appellants to resellers is includible in the assessable value of the goods cleared by the appellants under the new Section 4 of CEA,1944 post 1.7.2000 (ii). Whether the 3 SCNs under consideration are barred by limitation. 5.1. Coming to the first issue, the appellants submitted that the issue (in respect of old Section 4) came for consideration before this bench, in their own case, which passed an order 2003(162) ELT 399(Tri-Bang) upholding that compensation given to wholesale buyers for additional service of providing market intelligence for benefit of appellants was a commission and not discount as understood in trade of impugned commodity which could be deducted from assessable value. Hon ble Supreme Court has upheld the above order. The contention of the appellants is that in view of the changed legal position and change in the wordings of the contract the above decision is no longer applicable. They argued that as per Section 4 of CEA, 1944 and Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by virtue of the agreement and by virtue of consistent practice followed by the appellants. The wholesalers place purchase orders on the appellants for various models of computers. The wholesalers consider the list price available on the web deduct 30% and indicate the net purchase price at which the goods are to be supplied to them. The price lists/purchase orders would indicate that the appellants have been extending the discount at a minimum of 30%. The letters received by the appellants from majority of their customers indicate that they had been extended the minimum discount of 30% in all their transactions. The appellants submitted that details compiled for a short time indicate that the appellants have supplied the goods to their customers at a minimum discount of 30% (Actual discounts are ranging from 30-45%). In a few cases where the discount extended is less than 30%, the appellants have claimed deduction of discount as actually extended to the buyers and duty has been paid on the assessable value based on actual discount. We find that the Ld. Commissioner (in respect of Appeal No E/885/2011) observed that: I observe that prior to 1.12.2003; they had an agreement wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eading of entire para 7, of the Reseller Sell-through and Inventory reports , indicates, that services envisaged thereby, are not a service which would be normally provided for by a buyer , to a seller , on a principal to principal basis. If that was so, then this agreement was not called for as para 10 of the Wholesaler Programme Terms did provide for Reports. The compensation for this service is termed as remuneration in the concerned agreement. Remuneration as per Black s Law Dictionary is a reward, a recompense, a salary or a compensation for services rendered. They cannot be discounts which could be offered on price of goods sold; these services are not being rendered gratis, for mutual benefit of HP and the wholesaler/reseller by the later. Therefore, Remuneration of this 1%, would be in the nature of an expense incurred by HP, for marketing, not the goods being sold, but also for goods sold earlier or later to the same buyer or another buyer of HP. It is only being calculated or determined and paid or effected, as per the Remuneration terms, with reference to an additional discount of 1% already included upfront in resellers discount. Merely because it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the wholesale buyer; besides the Wholesale Programme Terms of sale. The issue would be, whether the buyer is an Agent of HP. The Commissioner has observed the same and concluded that the same person has acted as an Agent and Wholesale Dealer of HP. The appellants have contested this finding on the ground : - The definition of the wholesale dealer in Section 2(k) when it refers to the expression agent seeks to cover a wholesale dealer who, apart from acting as a wholesale dealer by purchasing and selling excisable goods, also acts as an agent for the purpose of stocking such goods belonging to others for the purpose of sale. What the provisions seek to recognize is the fact that a wholesaler can act not only as a dealer but also as an agent. This does not, however, mean that for the same consignment he can play a dual role. If for a particular consignment a wholesaler has acted as a purchaser of the goods to whom the property in the goods has been transferred, he cannot in the same vein be acting as an agent for the consignment. All that the definition recognizes is the fact that a wholesale dealer, apart from purchasing and selling goods, can also either for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is purchasing on principal to principal basis and thereafter consequent to another agreement accepting amounts termed as Remuneration to perform certain additional services on behalf of HP. By merely terming 1% compensation as the Remuneration the nature of compensation effected will not cease to be a commission paid, if it is in nature of a compensation for service. Mere change of the nomenclature of the package of compensation to remuneration will not take it out of the purview of being a commission in the facts of this case. It is well-settled law, that nature of the abatement is to be examined from the totality of the material. Merely because it is termed as additional discount would not make it an eligible discount in the same fashion and for the same reasons, that, by merely calling a payment as commission, it does not become an ineligible discount. Similarly, by calling a commission as a remuneration will not make it eligible. The nature of an abatement claim under Sec. 4 of the Central Excise Act, 1944, are required to be looked into and determined, to arrive at whether the abatements claimed, is in the nature of a discount as understood from the agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directly or indirectly an expenditure to the appellants. The remuneration due to the wholesalers is given in the form of discounts. Therefore, these add to the cost of the products that the appellants are selling. More so, in respect of the EHTP unit the clearances made to the wholesalers in the domestic market are in the nature of imports by the wholesalers. Therefore, all the amounts paid or payable by the wholesalers form part of the transaction value for the purpose of the wholesalers in terms of Section 14 of the Customs Act, 1962. 5.6. The appellants submitted that the Apex Court in the case of M/s. TVS Motors Co. Ltd. (supra) upheld the decision of Bombay High Court in the case of M/s. Tata Motors Ltd. (supra) wherein it was held that pre-delivery inspection and after-sales service charges are not includable in the transaction value . We find that in the above cases, it was held that these expenses were not includable in the assessable value of car as these were not paid by dealer to the manufacturer and dealers rendered these services as their legitimate activity, meeting labour cost for same from their retailing profit. On this very specific issue, the instant case o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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