LexM/S ELGI EQUIPMENTS LTD. versus COMMISSIONER OF CENTRAL EXCISE, COIMBATORE
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
• ' A MIS ELGI EQUIPMENTS LTD. .. 'l v. COMMISSIONER OF CENTRAL EXCISE, COIMBATORE AUGUST 14, 2007 B [S.H. KAPADIA AND V.S. SIRPURKAR, JJ.] Central Excise Act, 1944: -( ""t- c s. 4(/)(a)(as it stood before 2000)-Valuation of excisable goods- Trade discount-Claim with regard to-Assessee-manufacturer of service- station equipments-Claiming trade discount as a part of its sales pattern- . Assessee allowing 20% discount to distributors on list price on 90% sales I effected at factory gate-To sub-dealers discount given at 8% and balance 12% given to distributors as commission-Show cause notice issued to assessee D demanding differential amount of duty and penalty without furnishing details-Held: Revenue should have given detailed particulars-Assessee has given benefit of trade discount of 20% to majority of its dealers and, .... ~ therefore, it was entitled to trade discount of 20% in all cases. Central Excise(Valuation) Rules, 1975: E r. 6(a)-Benejit of abatement-Goods sold in retail-Wholesale price at factory gate available-Held: Assessee-manufacturer was entitled to abatement. Goods under stock transfer-Assessable value-Computation of-Large F percentage of goods sold in wholesale at factory gate-A small percentage cleared through depot-Held: When ex-factory price is ascertainable, Revenue "' erred in taking depot price as basis of the assessable value. Kirloskar Brothers Ltd. v. Commissioner of Central Excise, Pune, (2005) G 191 ELT 299 and Indian Oxygen Ltd. v. Collector of Central Excise, (198.8) 36 EL T 723, relied on .. I r- ' "' CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 7777-7780 of 2001. .... H 1040 • I / ,,. ELG! EQUIPMENTS LTD. v. COMMNR. OF CENTRAL EXCISE, COIMBATORE 1041 From the Orders No.C/967 to 970/2001 dated 26.6.2001 of the Customs, A Exci~e and Gold (Control) Appellate Tribunal, South Zonal Bench at Chennai in Appeal Nos. ENl206196 and ENl254 to 256/96-Md. V. Lakshmi Kumaran, Alok Yadav and M.P. Devanath for the Appellant. V. Shekhar, K.K. Senthivelan, Sudhir Kr. Sajwan and B. Krishna Prasad .f3 for the Respondent. The Order of the Court was delivered by ORDER The short point wh!ch arises for determination in these civil appeals filed by the assessee is - Whether the assessee was entitled to 20% trade discount. c Mis. Elgi Equipments Ltd., having registered office at Coimbatore, have four factories located at four different places. They manufacture compressors; D pumps, service-station equipments etc. Mis. Elgi Equipments Ltd. (assessees) claimed trade discounts varying from l 0% to 45% on different products. They declared that such discount was a part of their "Sales Pattern". During the course of assessment, the Department noticed certain price discrepancies. Therefore, an enquiry was made; statements of Directors were recorded and, E on that basis, a show cause notice was given to the assessee claiming differential amount of duty of Rs.40 lakhs. The assessee was also asked by the show cause notice as to why a penalty of Rs. I 0 lakhs should not be imposed. In these appeals, we are concerned with the period January, 1991 to F April, 1992. The main case of the Department was that the appellant-assessee did not possess uniform sales pattern; that they gave different discounts to Area Distributors and dealers to whom goods were cleared directly at the factory gate and that even in such a case, the Area Distributors were paid the balance 12% and therefore on account of this differential discount the assessees were not entitled to trade discount of 20%. As stated above, assessee is in the business of manufacturing service- station equipments. It is necessary to understand their Sales Pattern. The goods were sold to three distributors. These sales were effected at the factory gate directly to the distributor allowing 20% uniform discount on the list price. However, in respect of sales to sub-dealers discount given was 8% and G H 1042 SUPREME COURT REPORTS (2007] 8 S.C.R. A balance 12% was given to the distributors as commission. At the outset, we may mention that show cause notice was the foundation for the levy of penalty. In the entire show cause notice, the requisite details have not been furnished, namely, the total number of dealers, the number of main dealers, the number of sub-dealers and the rate of discount B to main dealers and small dealers. The show cause notice proceeds on the basis of the stateme
Excerpt shown. Read the full judgment & AI analysis in Lexace.