2004 (9) TMI 435 - AT - Central Excise

Summary

Issues:
1. Deduction on account of cash discount and turnover discount from the assessable value.

Analysis:
The judgment by the Appellate Tribunal CESTAT, New Delhi dealt with two appeals concerning the deduction on account of cash discount and turnover discount from the assessable value. The first issue involved the deduction of cash discount and turnover discount by M/s. Havell's Electronics Pvt. Ltd. The Commissioner (Appeals) allowed the deduction on account of cash discount but disallowed the turnover discount. The appellant contended that the discounts were known to customers before goods removal, as evidenced by invoices. The Revenue argued that turnover discount conditions did not promote marketability and evidence for cash discount deduction was insufficient.

The Tribunal referred to the Supreme Court case of Union of India v. Bombay Tyre International Ltd., emphasizing that discounts known before goods removal should be allowed. The Commissioner (Appeals) found that the cash discount scheme was known to buyers before sales, and the buyers were aware of the discount. The Tribunal upheld the Commissioner's decision, stating that the buyers' awareness of the cash discount scheme was sufficient to allow its deduction from the assessable value, rejecting the Revenue's appeal.

Regarding the turnover discount issue, the Tribunal noted that the discount was given universally without consideration of turnover purchases. The Commissioner (Appeals) disallowed the turnover discount deduction, considering it not a trade discount as understood commercially. However, the Tribunal held that the turnover discount, known to customers before goods removal, should be allowed for deduction. Citing the Supreme Court precedent, the Tribunal concluded that the turnover discount was admissible, and thus allowed M/s. Havell's Electronics Pvt. Ltd.'s appeal.

In summary, the Tribunal allowed the deduction of both cash discount and turnover discount from the assessable value, as the discounts were known to customers before goods removal, in accordance with established commercial practices and legal precedents.