Full Judgment
2. Shri B.L. Narasimhan, learned Advocate, submitted that the Appellants manufacture printing inks; that the Government of India floated a global tender for the purchase of security printing ink; that they made an offer to supply 1381 MTs on a price subject to discount of 8%; that the Government of India placed an ad hoc order for a quantity of 165 MTs on 29-1-1996; that it was indicated in the order that the rates were subject to a discount of 8%; that the Appellants, under letter dated 30-11-96 informed the Bank Note Press that the discount of 8% was for a quantity of 1381 MTs and that for a quantity of 165 MTs, they would not be in a position to offer the said discount; that they commenced despatches of the printing ink from 16-12-96 and offered on their own a discount of 0.8% on the assurance by the Bank Note Press authorities that they would buy additional quantities for the subsequent period; that the Appellants agreed to provide discount of 8% under their letter dated 24-2-1997 for the full quantity; that accordingly, for the despatch of 165 MTs already made before the discount was finalized, the Bank Note Press released payments at the reduced rates and the Appellants issued Credit Notes; that they filed a refund claim on 7-4-1997 for the excess duty paid by them; that the Assistant Commissioner rejected the refund claim under Order-in-Original No. 521/97, dated 28-10-97 holding that the discount of 8% was not agreed upon, and therefore, not known at the place of removal or prior to removal of the goods; that on appeal filed by them, the Commissioner (Appeals), under Order-in-Appeal No. 32/2001 dated 7-2-2001 rejected their appeal holding that the discount negotiated subsequently after clearance of the goods have no relevancy for the purpose of arriving at the assessable value; that, however, the Appellate Tribunal vide Final Order No. 287/2002-A, dated 12-6-2002, remanded the matter to the Adjudicating Authority for deciding the claim in the light of the ratio of the following decisions :-Camphor & Allied Products Ltd. v. CCE - 2000 (118) E.L.T. 65 (T-LB),Utkal Polyweave Industries P. Ltd. v. CCE - 2001 (136) E.L.T. 818 (T),CCE, Chandigarh v. Shivalik Electric Equipment Co. Ltd. - 2002 (140) E.L.T. 540 (T) = 2002 (49) RLT 270 (CEGAT).
3. The learned Advocate mentioned that in de novo proceedings, the Deputy Commissioner passed the Order-in-Original No 202/2002, dated 30-12-2002 rejecting the refund claim on the premises that the facts in the instant cases are different from the facts of the cases mentioned in Tribunal's Final Order dated 12-6-2002; that the Commissioner (Appeals) also under the impugned Order has rejected their claim for refund of duty relying on Supreme Court's judgment in the case of MRF Ltd. v. CCE, 1997 (92) E.L.T. 309 (S.C.). The learned Advocate contended that the sale of goods was under a contract and at the time of offer itself, they had clearly indicated that discount would be admissible @ 8% on a quantity of 1381 MTs; that thus the requirement that discount should have been known to the customer prior to the removal of the excisable goods is fully satisfied; that, therefore, the discount extended by the Appellants by way of Credit notes subsequently is eligible for deduction from the price and hence the duty paid in excess during the period in question is liable to be refunded to the Appellants. He also mentioned the Bank Note Press had paid them only the reduced price less 8% discount and Excise duty thereon and, therefore, the question of passing on the excise duty to the buyer cannot arise; that in view of the decisions in Camphor & Allied Products, Utkal Polyweave and Shivalik Electric Equipment Co. Ltd., disallowing of the refund is incorrect; that though the facts were different in each of these cases, the ratio of the law applicable to each of the case is the same and that is why the Tribunal has remanded the matter with directions to consider the present case in the light of law laid down in these decisions. He finally submitted that the finding that the discount @ 8% was the discount agreed after the removal of the goods is not correct as the Bank Note Press was not willing to accept any discount less than 8% which is evident from the protracted negotiations that took place between the Bank Note Press and the Appellants; that the discount of 8% was the discount insisted upon by the Bank Note Press prior to the removal of the goods and was the matter negotiations during the removal of the goods and culminated it to an agreed basis after the removal of the goods. He relied upon the decision in the case of Telephone Cables Ltd. v. CCE, Chandigarh 2003 (154) E.L.T. 237 (T).
4. Countering the arguments, Mrs. Krishna A. Mishra, learned SDR, submitted that the goods were removed by the Appellants giving a discount @ 0.8% as the Bank Note Press had placed order for the impugned goods for a quantity of 165 MT only instead of 1381 M.T.indicated by the Appellants in their offer dated 1-10-1996; that thus the discount of 8% came to be given only when additional quantity was ordered by Bank Note Press; that had there been no additional quantity ordered, the Appellants would have allowed a discount of only 0.8%; that thus it is apparent that a discount of 0.8% was known at or prior to removal of goods. She contended that in terms of the judgment of the Apex Court in the case of Union of India v. Bombay Tyre International Ltd., 1984 (17) E.L.T. 329 (S.C.), discount known at or prior to removal of goods is only to be allowed as a deduction.
5. We have considered the submissions of both the sides. It is not in dispute in the present proceedings that the trade discount is a permissible deduction. The dispute relates to the percentage at which the discount is to be deducted - 0.8% as it was mentioned in the invoice at the time of removal of the goods or at the rate of 8% as was finalized after negotiation between the Appellants and their customer Bank Note Press. This Tribunal, while remanding the case vide Final Order dated 12-6-2002 has mentioned the facts as follows : "The Appellants participated in the tender floated by the Government of India, Bank Note Press, for the supply of printing ink. They, in their tender, offered discount at the rate of 8% on the supply of a printing ink, if the entire supply of 1381 MTs was lifted by the Government by September, 1998. But the Government placed order only for supply of 165 MTs of printing ink and claimed discount at the rate of 8% but the appellants initially disagreed to pay that much discount. They insisted that discount at the rate of 8% could be given if the entire quantity of printing ink was lifted. However, pending negotiation and correspondence they supplied the ordered quantity of printing ink to the Government Press Note at the quoted price with discount of 8% as Bank Note Press placed order for additional quantity of 165 MTs of printing ink. The Appellants, accordingly claimed discount at that rate from the assessable value and filed refund claim." 6. In the light of these facts, the Appellants have contended that the Bank Note Press was knowing about the discount @ 8% prior to removal of the impugned goods and the same was finally agreed upon after prolonged negotiations. This contention is supported by the correspondence brought on record by the Appellants. They have offered discount at the rate of 8% in their letter dated 1-10-1996 provided the entire quantity of 1381 MTs is lifted by the Govt. of India by September, 1998. The Bank Note Press has placed an order for 165 MTs printing ink under its Telex dated 29-11-1996 at the Appellants' quoted rates less 8% discount. It is thus evident from the fax message by which the Bank Note Press had placed Order for supplying of printing ink that they were claiming 8% discount before removal of the impugned goods from the factory premises of the Appellants. The issue regarding quantum of discount was thereafter discussed between the Appellants and their customer and finally it was decided to give 8% discount to the customer, namely Bank Press Note of the Govt. of India. Thus it cannot be claimed by the Revenue that the trade discount @ 8% was not known prior to the removal of the goods. It has been held by the Supreme Court in the famous case of Bombay Tyre International Ltd. that the discount allowed in the trade (by whatever name such discount is described) should be allowed to be deducted from the sale price, the allowance and the nature of discount being known at or prior to the removal of the goods. The Supreme Court has further held that such trade discount shall not be disallowed only because they are not payable at the time of each invoice or deducted from the invoice price.
The Larger Bench of the Tribunal has also held in the case of Camphor & Allied Products (supra) that when buyers have entered into contract with the manufacturer to buy the goods in bulk quantity and agreed to lift such quantity within the stipulated time to get concession in the price of the goods, non-fulfilling the terms of the contract such as not lifting full quantity of the goods as agreed within the stipulated period is not a ground to discard Part-II price list if it is otherwise genuine. The Larger Bench of the Tribunal has held that "since the goods were lifted in pursuance of the contract at a price at which the goods are sold to buyers in the normal course of trade and in the absence of any material to establish that extra commercial consideration have been received due to such lowering price, there was no justification to discard Part-II in determining the value and assessment in terms of Section 4 of the Act." Similarly the Tribunal in the case of Shivalik Electric Co. Ltd. (supra) has held that when the prices agreed upon between parties it will be open to the parties to the agreement to modify the rate and if in spite of escalation clause the Electricity Board was not agreeable for modifying price to which the assessee also agreed here is no reason to hold that the assessee is not entitled to refund of the duty paid by them in anticipation of Electricity Board agreeing to pay escalation rate. The decision in the case of M.R.F. Ltd. relied upon by the learned Commissioner (Appeals) is not applicable to the facts of the present case inasmuch as in MRF case the prices were reduced after their clearance from the factory as a result of a meeting between the buyer and manufacturer and the Central Government which is not the situation in the present matter.
We, therefore, hold that the Appellants are entitled for a deduction of 8% discount allowed by them to their customer Bank Note Press.
Consequently they are eligible for the refund of the duty paid in excess by them. The Appeal is allowed.