At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Chennai
By, THE HONORABLE JUSTICE: SULEKHA BEEVI C.S.
By, MEMBER AND THE HONORABLE JUSTICE: MADHU MOHAN DAMODHAR
For Petitioner: P.C. Anand, Chartered Accountant And For Respondents: S. Govindarajan, AC (AR)
1. The appellants are engaged in the manufacture of P or P ayurvedic and allopathic medicaments. They filed refund claim for Rs. 4,87,622/- on the ground that they have discharged full duty at the time of clearance of goods without claiming any abatement towards quantity discount and are eligible for refund of the excise duty element on this eligible abatement of quantity discounts. The refund claim relates to the period April to September 2005. The appellant had removed P or P medicaments adopting value under section 4A r/w. Notification No. 2/2005-CE(NT) dated 7.1.2005. The department was of the view that the appellants are not eligible to claim any abatement as quantity discounts from the sales effected at the depot and a show cause notice was issued proposing to reject the refund claim. After due process of law, the original authority rejected the refund claim against which they filed appeal before Commissioner (Appeals), who upheld the order passed by the lower authority. Hence this appeal.
2. On behalf of the appellant, Ld. Consultant Shri P.C. Anand was fair enough to concede that the issue whether the appellant is eligible for quantity discounts on P or P medicaments is held against the appellant by the Larger Bench of the Tribunal in the case of Indica Laboratories Pvt. Ltd. Vs. Commissioner of Central Excise : 2007 (213) ELT 20 (Tri. - LB). He submitted that the said decision has been appealed to the Hon'ble High Court of Gujarat and is pending consideration by the Hon'ble High Court.
3. The learned AR Shri S. Govindarajan reiterated the findings in the impugned order.
4. Heard both sides.
5. The allegation in the show cause notice is as under:-
The assessee has removed P or P medicaments falling under Chapter 30, from the factory, adopting value under Section 4A read with Notification No. 2/2005-CE (NT) dated 7.1.2005 as amended. At the time of removal from the factory, the assessee has adopted the Section 4A value. The section 4A value has been adopted by deducting the eligible abatement as a percentage of retail sale price from the maximum retail price declared on such goods. The goods are assessed under Section 4A read with Notification No. 2/2005-CE (NT) dated 7.1.2005 as amended and during the period from 1.4.2005 to 31.9.2005 for which the present refund claim filed and duty has been discharged at the time of removal from the factory after availing the permissible abatement at 40% on the retail sale price and hence it appears that the assessee is not eligible to claim any further abatements, such as Quantity Discounts from the sales effected at the depot and therefore the assessee is not eligible for grant of refund of excise duty to the tune of Rs. 2,22,712/- (BED + CESS) paid on the Quantity Discount and therefore the refund claim to the extent of Rs. 2,22,712/- (BED + CESS) as per Annexure I enclosed to this notice relating to the period 1.4.2005 to 31.9.2005 is liable for rejection.
6. The appellant had claimed abatement due to quantity discounts based on the auditor's certificate in connection with despatches relating to Ayurvedic medicaments. The issue whether appellants are eligible for such quantity discount has been settled by the Larger Bench of the Tribunal in the case of India Laboratories Pvt. Ltd. (supra). The relevant portion of the Larger Bench decision is reproduced below:
15.2 The present case deals with P & P medicaments which are governed by the provisions of DPCO which prescribed in detail the mode of fixing the retail prices, the extent of margin to be given to the retailers, the manner of indicating the retail prices on the packages. It is also mandatory to affix retail prices even in packets of medicaments which are claimed to be supplied free. In the present case, it is basically the linked sale which is sale of 125 boxes at the price applicable to 100 boxes. Therefore, the claim that the goods are supplied free is not acceptable. The reliance placed by the appellant on the decision of the Tribunal in the case of Vinayaka Mosquito Coil Manufacturing Company cited supra is, therefore, misplaced. Further, we are not in agreement with the contention that if there is no sale, no duty is payable. No such ratio can be attributed to the order of Hon'ble the Supreme Court summarily dismissing the appeal against the order made by the Tribunal in Vinayaka Mosquito Coil Manufacturing.
16. We, therefore, hold that:
(a) Sale is not a necessary condition for charging to excise duty. Duty becomes payable (unless otherwise exempted) in respect of every removal of excisable goods.
(b) The concept of quantity discount applicable in the context of valuation under Section 4 is not applicable in determining value under Section 4A for the forgoing reasons.
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(c) In the present case, the sale is for the gross quantity at the net price and the claimed free supply is not meant for the ultimate customer; such quantity claimed to be given also carried MRP. Therefore, duty shall be discharged on the entire quantity including goods covered as the quantity discount on the basis of valued arrived at under Section 4A after giving the abatement provided for. 7. Following the same, we find that the impugned order calls for no interference, the same is upheld and the appeal is dismissed.