2016 (1) TMI 272 - AT - Central Excise

Valuation of goods - appellant had not passed the cash discount to their customers but deducted the quantum of cash discount from the assessable value at the time of clearance - Held that - Issue is no more res integra as Tribunal in the case of Purolator India Ltd. vs. Commissioner of Central Excise, Delhi - 2004 (11) TMI 208 - CESTAT, NEW DELHI had considered similar issue and it was held against the assessee therein on the ground that the cash discount which is not passed on is to be included in the assessable value. Aggrieved by such order, the assessee therein took up the matter in Civil Appeal before the Apex Court. The Hon ble Apex Court in their judgment dated 25.8.2015 as reported at - set aside the order of the Tribunal in so far as it rejected the contention on the cash discount - impugned order is unsustainable and liable to be set aside Cash discounts for prompt payment of price of goods on delivery, are admissible in arriving at the assessable value if they are available to all buyers. - Decided in favour of assessee.

Summary

Issues: Valuation of products for cash discount eligibility

The judgment by the Appellate Tribunal CESTAT Mumbai involved an appeal against an Order-in-Appeal passed by the Commissioner of Central Excise & Service Tax. The primary issue in this case revolved around the valuation of products manufactured and cleared by the appellant concerning cash discounts. The appellant contended that they were entitled to cash discounts from the valuation, even if not extended to all customers. Conversely, the Revenue argued that the appellant did not pass on the cash discount to customers but deducted it from the assessable value during clearance.

After hearing both sides and examining the records, the Tribunal referred to a previous case involving a similar issue where the Tribunal had ruled against the assessee, stating that cash discounts not passed on should be included in the assessable value. However, the assessee had appealed to the Apex Court, which, in its judgment, emphasized the concept of "transaction value" under Section 4, highlighting that the value of excisable goods at the time of removal is crucial. The Court clarified that cash discounts known before clearance must be deducted from the sale price to determine the value of excisable goods at the time of removal. The Court also referenced a Central Board of Excise and Customs Bulletin from 1975, affirming that cash discounts for prompt payment are admissible in arriving at the assessable value if available to all buyers.

Based on the Apex Court's judgment and the principles outlined, the Tribunal concluded that the impugned order was unsustainable. Consequently, the Tribunal set aside the order and allowed the appeal with any consequential relief as per the law. The judgment highlighted the significance of considering cash discounts in determining the price of goods for valuation purposes, in line with the provisions of Section 4 as amended in 2000.

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