2006 (1) TMI 492 - AT - Central Excise

Summary

Issues:
1. Whether prompt payment cash discount is a permissible deduction from the assessable value under Section 4 of the Central Excise Act, 1944.

Analysis:
The dispute in the case revolves around the permissibility of prompt payment cash discount as a deduction from the assessable value under Section 4 of the Central Excise Act, 1944. Both the Appellant and the Respondent agree that the department has allowed the deduction in cases where the discount has actually been availed and passed on to the customers. However, there is disagreement when the discount has not been actually availed. The lower appellate authority relied on the decision of the Hon'ble High Court of Bombay in Hindustan Mineral Products Co. Put. Ltd. v. Union of India, which held that such discounts are allowable only when actually availed by customers, not universally.

The Appellant cites a contrary decision by the Hon'ble High Court of Bombay in Goodlass Nerolac Paints Ltd. v. Union of India, where it was held that prompt payment cash discount is admissible for deduction regardless of individual customer availing. This decision was also followed by the Tribunal in CCE, Bangalore v. H & R Johnson (India) Ltd., and a Civil Appeal against it was dismissed by the Hon'ble Supreme Court in Commissioner v. H.R. Johnson Ltd. Due to conflicting decisions from the same High Court and the higher authority's dismissal of the appeal, the appeal is allowed in favor of the Appellant, even though the discount was not availed in the transactions in question.

In conclusion, the Appellate Tribunal CESTAT, Mumbai, ruled that prompt payment cash discount is a permissible deduction from the assessable value under Section 4 of the Central Excise Act, 1944, based on the conflicting decisions of the Hon'ble High Court of Bombay and the subsequent Tribunal and Supreme Court rulings. The judgment allows the deduction even when the discount has not been availed by customers in the transactions under consideration.