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TMI Blog2023 (6) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... counts of any description given on any normal price payable for any transaction and same will not form part of the transaction value of goods. The discount is not being given in the form of a reimbursement for distributors undertaking installation and after sale services during the warranty period . Since both the activities are beyond the place of removal and post sale activities and therefore it is not a liability of the manufacturer assessee to undertake such activity. Thus, we are of the view that it is wrong on the part of the department to assume that distributors are being compensated in the form of discount for the expenditure which they have incurred on undertaking installation and after sale service during warranty period. It has also been held under the various decisions of this Tribunal that such expenditures are not includable otherwise also in the assessable value. In this regard reliance placed in Tribunal decision in the case of GENERAL MOTORS INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE I [ 2022 (4) TMI 1539 - CESTAT MUMBAI] . The issue under consideration has already been settled by Hon ble Supreme Court in the case of M/S. PUROLATO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... distributors. 1.2 It has been the contention of the department that the discount offered to the distributors as per the agreement between the appellant and their distributors are for performing installation and after sale services within the warranty period of the product. The service of installation and after sale service within the warranty period was required to be provided by the distributor as per the distributor s agreement and the expense incurred towards such installation and after sale service were to be borne by the distributor and such expenses were not to be reimbursed by the appellant to its distributors. It is further contended by the department that in the case of the direct sales by the appellant to its actual users, the expenses with regard to installation and after sale service during the warranty period are borne by the appellant himself and they are included in the assessable value for the purpose of assessment and levy of duty. 1.3 The departmental was thus, primarily of view that the expenses on installation and after sale service during the warranty period incurred by the distributor, the appellant is passing on such charges in the form of discount to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etween the direct sales and the sales through the distributor. 2.2 The Learned Advocate argued that even in case the departments contention is accepted fir time being and the discount is considered as consideration for after sale services provided by the distributor even then the same cannot be included in the assessable value as it is a settled law that post manufacturing expenses like after sale service incurred by the distributor cannot be included in the transaction value for payment of excise duty. The Learned Advocate has placed reliance on the following judgments in this regard. CCE, Mysore Vs. TVS Motors Co. Ltd 2016 (331) ELT 3 (SC) Tata Motors Ltd Vs. Union OF India - 2012 (286) ELT 161 (Bom.) Skoda Auto Volkswagen India Pvt. Ltd Vs. CCE - 2021 (12) TMI 239- CESTAT Mumbai 2.3 On the basis of above, it has been submitted that demand of excise duty confirmed under the impugned order-in- original on the value of discount passed on by the appellant to the distributor is not sustainable in law as well as on merit. 2.4 The Learned Advocate also drawn our attention to the fact that the show cause notice does not invoke the provision of Rule 6 of Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing, servicing, warranty, commission or any other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods. From the reading of the above provisions of Central Excise Act, 1994 it reveals that for transaction value to be accepted for the purpose of the assessement, the following three essential ingredients needs to be satisfied with regard to transaction value:- (i) the goods are sold by an assessee for delivery at the time of place of removal , the term place of removal removal has been defined basically to mean a factory or warehouse or any other premises which are in the possession of the asseessee. (ii) The assessee and buyer of the goods are not related. (iii) The price is only consideration for sale. Thus, it can be seen that the Section 4 essentially seeks to accept different transaction value which may be charge by an assessee from it different buyers. For assessment purpose so long as this are based upon purely commercial consideration where buyer and seller have no relationship and the price remains sole consideration for sale. This way it enables valuation of goods fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntity discount before the sale of the goods from the place of removal i.e. Depot and discount was shown in the sale invoice. In recent judgment of Purolator India Ltd. v. Commissioner of Central Excise, Delhi-III, we find that as per the definition of transaction value under the amended Section 4 the transaction value means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter, but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods. From the above definition it can be seen that the actual amount that the buyer is liable to pay at the time of sale or at any other time shall be the transaction value. In the present case admit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... removal . In view of our above observation on facts and settle legal position of law, we are of the considered view that quantity discount was correctly claimed by the appellant as the same was claimed at the time of sale of the goods. We therefore set aside the impugned order and allow the appeal of the appellant. 5.4 We also take note of this Tribunal s decision in the case of M/s. Mercury Pneumatics Ltd VS. CCE, Mumbai reported under 2017 (348) ELT 474 (Tri. Mum) 3 . The relevant facts arise for consideration are appellant was engaged in manufacturing of excisable goods falling under Chapter Headings 84 85 of CETA, 1985 and sell the products through sales agent appointed for different area and also sell directly to the customers. In case of sales made directly to the customers, the concerned sales agent in the area is given a commission of 10% to 20% depending upon the product and the amount of commission is loaded in the assessable value. In case of sales made to the sales agent a discount of 10% to 20% is shown on the invoice raised in the name of the agent which is deducted to arrive at assessable value. Show cause notices were issued for the period April, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave confused with the entire issue by mixing up both the sales transaction. The first set of sale of transaction through sales agent i.e. wherein the sales agent assist the ultimate customers to place an order directly on the appellant for the procurement of the final product while in the 2nd set of transaction, sales agent purchases the products from appellant herein for resale. We find strong force in the contention raised by the learned Counsel that the statement of Shri Paul D Souza, Accounts Manager of the appellant (page 13 of the appeal book) clearly brings the fact that they sell goods directly to the customers for the order placed and also sell their goods to sales agents. The sales agents become entitled to the commission when order is procured through sales agents. In the same statement it is also made clear that another set of transaction which is of sale on principal-to-principal basis to the very same persons who are acting as agents and the said transaction are at arms length. We have noted that one of the dealer Shri Bhagvat in his statement clearly indicated that the relation between him and the appellant is of purchaser and the seller and he is registered as deale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absence of any evidence, each and every sales invoices raised by the appellant could be a separate transaction and Central Excise duty is payable on the amounts received for such invoices. 5.5 We find that since the sale invoice which have been issued to the distributors by the appellant offering 15 % discount is normally a trade discount and the department has failed to discharge its responsibility to establish that there has been any flow back of consideration from buyer to the appellant. Thus, We find that the transaction value declared by the appellant is correct assessable value for the payment of central excise duty and discount cannot be added to the assessable for charging central excise duty. 6. Following the above decisions, we hold that the impugned order- in-original is without any merit and same is rejected. Accordingly, appeals are allowed. 7. The appeal No. E/ 11113/ 2014 has been filed in this case by the department showing that the Adjudicating Authority have failed to impose appropriate amount of the penalty under Section 11 AC of Central Excise Act, 1944 read wit Rule 25 of the Central Excise Rules, 2002. It has been pleaded that penalty amount should ..... X X X X Extracts X X X X X X X X Extracts X X X X
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