By TIOL News Service

MUMBAI, SEPT 28, 2016: THE appellants were clearing Motor Vehicles to their dealers at a fixed rate and allowing the quantity discount based on turnover. The discount proposed to the dealers is determined on the calendar year based performance on off-take.

On their request,the assessments were made provisional and later finalized; the turnover discount was not granted and demand was made of differential duty.

The demand was confirmed by the adjudicating authority and upheld by the Commissioner(A).

In appeal before the CESTAT the appellant submitted -

+ Deduction of turnover discount is squarely covered by the decision in Mark Auto Industries - 2003-TIOL-18-CESTAT-DEL.

+ Adjustment of excess payment of duty and short payment of duty on finalisation was sought to be denied on the ground that the excess payment needed to be considered from the angle of unjust enrichment; that the issue is no more res integra as the High Court of Karnataka in the case of Toyota Kirloskar Auto Parts Pvt. Ltd. Vs. CCE, LTU, Bangalore - 2012-TIOL-10-HC-KAR-CX, Tribunal's decision in the case of Raptakos Brett Vs. CCE – 2016-TIOL-138-CESTAT-MUM and Woodhead & Sons Vs. CCE - 2015-TIOL-1848-CESTAT-MAD categorically laid down law that adjustment of the excess payment of duty and short payment of duty can be made when provisional assessments are finalised.

+ As regards the issue of allowing of discount even to non-achieving dealers, the said discount was passed in order to encourage the dealer to perform better and achieve the targets.

The AR reiterated the stand of the department.

The CESTAT observed -

+ We find that the impugned order is not sustainable in respect of all the three points; as regards of extending the discount to non-performing dealers, the denial of deduction of such discount from the assessable value seems to be incorrect, as there is no reason for disallowing the same. It is an admitted fact that the discount is extended to non-performing dealers also and that it has been passed on. We agree with the learned Counsel that by extending such discount it will encourage the dealers to work more efficiently and get orders for cars which will benefit the dealers as well as the appellant.

+ As regards the duty liability on the turnover discount extended, it is seen from circular of appellant that this turnover discount specifically states that the said discount is available to all the dealers beginning on the first day of calendar year and ends on the last day of such calendar year. The turnover discount is an advancely intimated discount without any qualification as to which cars are to be sold to be eligible for Turnover Discount; the circular only states that to be eligible for Turnover Discount specific number of cars need to be sold in a calendar year. In such a factual position, we are of the view that the deduction claimed by the appellant on the turnover discount is legitimate and needs to be extended to him. [Mark Auto Industries - 2003-TIOL-18-CESTAT-DEL refers]

+ In view of the authoritative judicial pronouncements the adjustment of excess payment of duty to the short payment of duty, on finalisation of provisional assessment, is to be allowed. [Toyota Kirloskar Auto Parts Pvt. Ltd. - 2012-TIOL-10-HC-KAR-CX as followed in the case of BSNL - 2014-TIOL-1410-CESTAT-DEL refers]

The impugned orders were set aside and the appeals were allowed.

(See 2016-TIOL-2567-CESTAT-MUM)