2001 (1) TMI 191 - AT - Central Excise

Summary

Issues:
1. Entitlement of reduction of 2% in the value of clearances for prompt payment discount.
2. Whether the abatement of 2% value towards prompt payment discount should be granted.

Analysis:
1. The appeals arose from a decision by the Commissioner (Appeals) granting reduction of 2% in the value of clearances for prompt payment discount. The Asst. Commissioner had directed to load the 2% value in the assessable value. The Commissioner (Appeals) relied on the Apex Court judgment in a specific case and a CBEC Circular to support the assessee's entitlement to the discount. The Tribunal noted that the view was consistent with previous judgments and held that prompt payment discounts are allowable as abatement from the assessable value across the board, not limited to buyers actually availing the cash payment facility.

2. The Revenue contended that the abatement of 2% value should not be granted as the duty was not passed on to buyers who failed to clear their liability within the stipulated period. The Respondents argued that prompt payment discount is deductible from the assessable value under Rule 5(4)(d)(ii) of Central Excise Rules. They cited various judgments supporting the deduction of such discounts, emphasizing that it is a trade discount and permissible under the law.

3. The Tribunal carefully considered the arguments presented by both parties. It noted that the Asst. Commissioner had rejected the plea for the 2% discount, while the Commissioner (Appeals) had allowed it based on legal precedents. The Tribunal found that the judgments cited by the assessee supported the allowance of prompt payment discounts as abatement from the assessable value. The Tribunal referred to its own previous judgment in a similar case and concluded that the Revenue's grounds did not align with established legal principles. Therefore, the Tribunal rejected the Revenue's appeals, affirming the entitlement of the assessee to the prompt payment discount.

This detailed analysis of the judgment highlights the key issues, arguments presented by both sides, legal precedents cited, and the Tribunal's reasoning leading to the decision to reject the Revenue's appeals.