2017 (5) TMI 460 - AT - Central Excise

Grant of trade discount - Held that - the discounts by any name are allowable as abatement subject to the condition that it is known prior to the clearance of the goods - Since the stockists are allowed actual discount of 18.5% as per the law the party is entitled to claim 18.5% for all its clearances irrespective of the fact that the actual discount allowed to the sub-stockists is only 16% - discount allowed. Turnover discounts - Held that - the issue stands decided in the case of Commissioner of Central Excise, Chandigarh vs. Goezte (India) Ltd. 2010 (7) TMI 363 - CESTAT, NEW DELHI wherein it has been held that deduction of trade discounts for determining the assessable value is permissible only to the extent of the said discounts actually passed on to the buyers - matter remanded for verification. Whether adjustment of refund with the demands at the time of finalization of provisional assessment is permissible? - Held that - The issue has been considered at length in the decision of Hon ble Karnataka High Court in the case of Toyota Kirloskar Auto Parts Pvt. Ltd. vs. CCE, LTU, Bangalore 2011 (10) TMI 201 - KARNATAKA HIGH COURT , where it was held that there is no indication that when an assessee is permitted to pay duty in pursuance of a provisional assessment order, if he is dealing with more than one goods, they have to be treated separately - there is no reason to interfere with the findings of the Commissioner (A) on the question of adjustment at the time of finalization of the provisional assessment. Appeal disposed off - partly decided against Revenue - part matter on remand.

Summary

Issues:
1. Trade discount valuation for stockists and sub-stockists.
2. Entitlement of abatements from assessable value for turnover discounts.
3. Permissibility of adjustment of refund with demands during provisional assessment.

Issue 1: Trade discount valuation for stockists and sub-stockists
The first issue concerns the dispute over the grant of trade discount by the Revenue. The assessee's sales pattern involved goods being sent from the factory to depots and then to stockists with an 18.5% trade discount, while sub-stockists received a 16% discount. The Commissioner (A) ruled that the 18.5% trade discount should be applicable to all clearances to both stockists and sub-stockists. The Tribunal upheld this decision, citing Section 4 and Central Excise Valuation Rules, emphasizing that the normal transaction value for goods sold to stockists should be considered. The Tribunal rejected the Revenue's appeal on this issue.

Issue 2: Entitlement of abatements from assessable value for turnover discounts
The second issue raised by the assessee pertains to claiming turnover discounts as abatements from the assessable value on an average basis. The impugned orders held that turnover discounts should be allowed as abatements on an actual basis. The Tribunal referred to a previous case law stating that deduction of trade discounts for determining the assessable value is permissible only to the extent of discounts actually passed on to buyers. The matter was remanded to the adjudicating authority to verify documents and allow turnover discounts on an actual basis.

Issue 3: Permissibility of adjustment of refund with demands during provisional assessment
The final issue involves the permissibility of adjusting refunds with demands during the finalization of provisional assessment. The Commissioner (A) directed the adjudicating authority to adjust the demand against the refund due to the assessee in accordance with the Central Excise Rule. The Revenue contested this, arguing that each transaction should be examined for unjust enrichment. The Tribunal relied on a decision of the Karnataka High Court and upheld the Commissioner's findings on the permissibility of adjustment during provisional assessment. Consequently, the Revenue's appeals on this point were rejected.

In conclusion, the Tribunal addressed the issues related to trade discount valuation, entitlement of abatements for turnover discounts, and the adjustment of refunds during provisional assessment. The judgment provided detailed analysis based on legal provisions and precedents, ultimately upholding the decisions on trade discounts and adjustment of refunds while remanding the matter concerning turnover discounts for further verification.