2020 (4) TMI 469 - AT - Central Excise

Valuation - allowability of deduction of discounts which are known at the time of clearance of goods from Depot but are quantified later - Finalization of provisional assessment of goods - rejection of request for provisional assessment - HELD THAT - The issue is no more res-integra, in view of the decision of Hon ble Apex Court in the case of UNION OF INDIA OTHERS VERSUS BOMBAY TYRES INTERNATIONAL PVT. LTD. 1983 (11) TMI 70 - SUPREME COURT where it was held that the deduction of trade discounts known and understood at the time of removal of goods is permissible even if the same are quantified later. Thus, though the availability of the discounts was known at the time of clearance of the goods, these were quantified later but are to be deducted from transaction value. Thus, at the time of clearance of goods, since there is no quantification of demand, provisional assessment needs to be resorted to. This is also in line with the Board s Circular dated 30.06.2000 - the rejection of the request for provisional assessment was incorrect and unsustainable in law and the learned Commissioner (Appeals) has rightly set aside the order passed by the learned Assistant Commissioner, rejecting the request for provisional assessment. Appeal dismissed - decided against Revenue.

Summary

Issues:
(i) Whether the Respondent was entitled to deduction of discounts known at the time of clearance of goods from the depot but quantified later on? (Appeal No.52691)
(ii) Whether the request for provisional assessment has been rightly rejected? (Appeal No. 52692)

Analysis:
The judgment pertains to an order disposing of two appeals filed by the Department, addressing similar issues. The Respondents, engaged in manufacturing tires, tubes, and flaps, provided discounts to dealers on goods sold from their depots. A request for provisional assessment was granted, allowing the Respondents to clear goods at net dealer price less claimed discounts. The Department later contested the deduction of discounts known at clearance but quantified later. A show cause notice was issued, leading to Orders-in-Original allowing some deductions. Appeals were filed against these orders. In one appeal, the request for provisional assessment for 2016-17 was rejected, but the Commissioner (Appeals) accepted the appeal. The Department then appealed to challenge the Respondent's entitlement to deduct discounts from transaction value.

The Tribunal considered relevant case laws, including the decision of the Hon'ble Apex Court in the case of Bombay Tyres International Pvt. Ltd. The judgment clarified that deductions of known discounts at the time of goods removal, even if quantified later, are permissible. The Tribunal also referenced a Circular stating that discounts are allowable, even if quantified post-clearance. In Appeal No. 52692, the rejection of the provisional assessment request was deemed incorrect. The Tribunal upheld the Commissioner (Appeals) decision, setting aside the rejection. Consequently, both issues were decided in favor of the Respondent, upholding the order and rejecting the Department's appeals.

The judgment reaffirmed the legality of deducting discounts known at the time of clearance but quantified later, following established legal precedents and relevant circulars. The rejection of the provisional assessment request was deemed unsustainable, aligning with legal provisions and the Circular's guidelines. The Tribunal's decision upheld the Respondent's entitlement to the deductions, concluding that the Department's appeals lacked merit.