Carona Ltd. Vs. Collector of Central Excise

Carona Ltd. vs Collector of Central Excise

Type Court Judgment Court Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi Decided Jun 02, 1997

~3 min read

https://sooperkanoon.com/case/11291

For advocates & juniors · 7-day free trial

Brief this judgment before chambers

Stop skimming 50 pages - get an 18-section AI Brief on this case, ask scoped follow-ups, and find related precedents with Semantic Search. Full trial, no card required.

18-section brief - facts, issues, ratio, relief
Ask this case - answers cite the judgment
Semantic search - find precedents by meaning
Research drawer - sections, cites, related cases

Citation: sooperkanoon.com/11291
Court: Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On: Jun 02, 1997
Subject: MRTP

Case Summary

AI-generated summary - not the official court judgment text.

MRTP

Key legal issue: MRTP

Parties & Advocates

Appellant / Petitioner

Carona Ltd.

Respondent

Collector of Central Excise

Legal References

Reported In: (1997)(94)ELT566TriDel

Excerpt

.....in taking the stand on the basis of a case not put forth in the show cause notice.4. it is true that the trade discount to buyers was not uniform but from submissions made before us, it is clear that a higher discount was allowed to buyers in bombay while lower discount was allowed to buyers at different places outside bombay. this would be on the basis of the quantum of sales. the explanation offered by the appellant was that in respect of outside sales the goods were being delivered at the premises of the buyers while the buyers at bombay had taken delivery from the godown depot of the appellant and the discount was less in the case of outside buyers in order to cover the cost of transportation. this appears to be a reasonable ground to reduce the discount to such buyers. in our opinion the buyers fall under different classes and offer of discount at different rates to different class of buyers would be within the framework of proviso (3) to section 4(1)(a) of central excise act, 1944 and therefore, the discounts granted should be allowed. there is no justification to restrict discount to 5% in respect of all buyers and demand differential duty in the above case.5. for the reasons indicated above, we set aside the impugned order and allow the appeal.

Full Judgment

1. Appellant, engaged in the manufacture of footwear filed two price lists 14/986 and 22/86 declaring prices of footwear and also claiming deduction of trade discount at 12% per annum. The prices lists were approved and clearances were made on payment of appropriate duty. It was subsequently found that appellant was paying 12% discount to buyers in Bombay and lower discount raging from 5% to 7.5% to dealers outside Bombay. Accordingly notice was issued proposing to allow only the minimum quantum of discount. The notice was opposed by the appellant but was confirmed by the Assistant Collector (Appeals). In other words, deduction of trade discount was restricted to 5% in all cases. Hence, the present appeal.

2. The appellate authority disallowed the deduction claimed at 12% on the ground that 12% discount was allowed to M/s. Bombay Footwear who deposited Rs. 5,000/- to the appellant while 7.5% discount was allowed to M/s. Raunaq Rati Manga of Bhatinda who deposited Rs. 3,000/- to the appellant and the trade discount offered by the appellant had nexus with the amount deposited by the buyers with the appellant.

3. Thus, we see that the reasoning of the two lower authorities was divergent. The reasoning of the Assistant Collector was that trade discount given was not uniform in all cases. The reasoning of the appellate authority was that the deposit received from buyers had depressed the price. The show cause notice did not make any reference to any deposit received from any buyer or the deposit having any effect on the price structure. Therefore, the appellant had no opportunity to defend such case. In our view, the Collector was not justified in taking the stand on the basis of a case not put forth in the show cause notice.

4. It is true that the trade discount to buyers was not uniform but from submissions made before us, it is clear that a higher discount was allowed to buyers in Bombay while lower discount was allowed to buyers at different places outside Bombay. This would be on the basis of the quantum of sales. The explanation offered by the appellant was that in respect of outside sales the goods were being delivered at the premises of the buyers while the buyers at Bombay had taken delivery from the godown depot of the appellant and the discount was less in the case of outside buyers in order to cover the cost of transportation. This appears to be a reasonable ground to reduce the discount to such buyers. In our opinion the buyers fall under different classes and offer of discount at different rates to different class of buyers would be within the framework of proviso (3) to Section 4(1)(a) of Central Excise Act, 1944 and therefore, the discounts granted should be allowed. There is no justification to restrict discount to 5% in respect of all buyers and demand differential duty in the above case.

5. For the reasons indicated above, we set aside the impugned order and allow the appeal.

Same Court & Year Customs Excise and Service Tax Appellate Tribunal CESTAT Delh... Same Parties Carona Ltd. vs Collector of Central Excise Same Subject MRTP