Toyota Kirloskar Motor Private Limited Vs Commissioner of Central Tax (CESTAT Bangalore)
CESTAT Bangalore held that cross-model utilisation of discount resulting into undervaluation are inadmissible under section 4 of the Central Excise Act, 1944.
Facts- The appellants are engaged in the manufacture of Multi Utility Vehicle (MUV) / passenger cars and parts thereof falling under Chapter Sub-Heading 8703 23 10 and 8708 10 90 of the Central Excise Tariff Act, 1985. They manufacture various models of cars viz., Innova, Fortuner, Corolla, Etios Sedan, Etios Liva, Camry and Camry Hybrid. The effective rate of Central Excise duty vary from one vehicle model to another.
During the course of audit of the records, it has been observed that appellant is passing on discounts under various sales incentive/promotion schemes circulated to its dealers from time to time. On an analysis of the discounts based on various models, it was observed that they had adopted discount methodology only for specific type of models viz., Etios, Liva, Innova and Camry hybrid models. It was accounted through reduction in the assessable value in the dealers invoices in respect of clearances of Fortuner, Innova and Corolla models which attracts higher rate of duty.
It is alleged that due to cross-model discount and adjustment of discounts provided to spare parts and service charges against the value of vehicles attracting higher rate of duty were not informed to the department, hence, they had indulged in undervaluation of the goods. Consequently, a show-cause notice was issued to them on 11.4.2017 for recovery of short-payment of duty of Rs.54,33,17,188/-. The demand was confirmed. Hence, the present appeal.
