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TMI Blog2023 (9) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... duty on the value which could be determined under Section 4 (1)(a) of the Central Excise Act, 1944. Thus, it is not necessary to charge the duty on the normal transaction value as claimed by the respondents. Further, in view of the relationship of the distributors as that of agents, the deduction of discounts claimed by the respondents for various calendar years was not permissible. However, the respondent was entitled to deductions on account of cash discounts, quantity discounts, PME etc. In terms of the agreement with the distributors, the goods were purchased by the distributors at the rates fixed by the respondents from time to time and it is expressly provided in the agreement that all the transactions between the respondent and the distributor are on principal to principal basis and nothing in the agreement shall constitute or be deemed to constitute by either party as the agent of the other - the valuation of the goods cannot be done in terms of 4 (1)(a) of the Central Excise Act, 1944 as the goods are not sold for delivery at the time and place of removal, the time of removal being the time at which the goods were cleared from the factory. In this case, the sale of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner (Appeals) in his order, therefore, the impugned orders are to be set aside. 4. Heard both the parties and considered the submissions. 5. We find that in all the appeals, the facts are that the respondent does not sell these goods at their factory gate. The goods are first transferred to stock transfer basis to the premises of different C F Agents wherefrom the goods were sold to the distributors under dealers invoices. The distributors further sell the goods within their respective areas. Therefore, the respondent sought finalization of assessments on the basis of normal transaction value. Further, discounts are given to the distributors. These discounts vary from year to year. Therefore, it is the contention of the respondents that the assessable value has to be determined on normal transaction value after allowing the distributors discounts and other discounts, such as, quantity discounts, cash discounts, PME etc. 6. The adjudicating authority held that in terms of the agreements entered into between the respondent and the distributors, the respondent has imposed such conditions on the distributors, which meant that the distributors were being controlled in all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time of removal being the time at which goods are cleared from the factory. Putting it differently, the sale of such goods from the C F agents premises is at a time which is subsequent to the time of removal , that is, subsequent to the time at which such goods had been removed from the factory. Therefore, valuation of such goods would be governed by Section 4(1)(b) of the said Act and the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. The lower authority has come to the wrong conclusions that valuation of such goods can be determined in terms of Section 4(1)(a) of the said Act. 10. The next point for determination is whether the sale made to the distributor is a genuine sale or does the distributor act as an agent of the appellant and the real sale is to the customers/dealers. In this context, it is necessary to refer to the Agreement in terms of which there is a sale between the distributors and the appellant. It is clearly stated in the Agreement that the sale between the distributor and the appellant is on principal to principal basis and that the distributor is not an agent of the appellant. The distributors have paid for the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the greatest extent and in doing so supplement the efforts of the distributors. Thus, I hold that the distributors are not agents as so wrongly held by the lower authority. The distributors for their services are entitled for distributors discounts. 13. In view of the above, when the sale of goods does not take place at the factory gate, valuation of the goods is governed by rule 7. In terms of rule 7, the valuation has to be on the NTV. It has further been pleaded that determination has to be made ER-1 wise. In this context, attention is invited to paras 2.6 and 2.7 of Chapter 3 of the CBEC Supplementary Instructions, which reads as- 2.6. Finalisation of provisional assessment means finalization of an issue/ground and thereafter finalization of each ER-1. The amount will communicated to the assessee at the earliest. The amount of each differential duty shall be paid along with interest at the rate specified by the Central Government by Notification issued under Section 11AA or 11AB of the Act from the first day of the month succeeding the month for which such amount is determined, till the date of payment thereof. 2.7. If the assesee is in a position to asc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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