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2006 (9) TMI 20 - AT - Central ExciseCentral Excise Assessable value Quantity discount is admissible to deduction though not showed in invoices as it was declared in price list and granted by issuance of credit note
Issues: Quantity discount eligibility and deduction from sale price.
Analysis: The case was remanded to the Appellate Tribunal by the Supreme Court for consideration of the issue of quantity discount. The appellant argued that quantity discount had been granted to dealers for soaps during the period in question, as evidenced by price lists and judicial approvals. The appellant also presented affidavits and certificates to support the practice of granting quantity discount. The appellant contended that quantity discount is a permissible deduction from the sale price, citing various judgments in support. The Senior Departmental Representative (SDR) countered by stating that the materials provided by the appellant did not specify the rate or details of the quantity discount given. The SDR also highlighted the absence of circulars or general communications proving the basis of the quantity discount. The objection in the impugned order focused on the lack of mention of quantity discount in the invoices, despite credit notes being issued later to reflect the discount. The Tribunal noted that the objection was based on the absence of explicit mention of the discount in the invoices, even though the discount was passed on through credit notes. It emphasized that quantity discount accrues upon the purchase of a specific quantity, which may accumulate over time. The Tribunal clarified that in the case of consumer goods with regular deliveries, it is not necessary to indicate quantity discount in each sale invoice. The availability of the discount at the time of sale is crucial, regardless of the timing of its application. The Tribunal examined a price list that explicitly mentioned the quantity discount rate and amount, demonstrating that the discount was disclosed to the revenue authorities before the sale. The Tribunal concluded that the quantity discount was known and granted at the time of sale, making it a permissible deduction. As a result, the appeal was allowed, with any consequential relief granted to the appellant.
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