2017 (8) TMI 511 - AT - Central Excise

Valuation - includibility - stand of the department is that certain deductions like trade discount, extra trade discount and additional trade discount claimed from the wholesale price is not permissible in respect of retail sale clearances - Held that - the issue in the present case is no more res integra and has been settled by the Hon ble Supreme Court in the case of Metal Box Ltd. Vs. Collector of Central Excise, Madras 1995 (1) TMI 380 - SUPREME COURT , where it was held that Tribunal was in error in taking the view that as trade discount was uniformly not given to all its customers by the assessee, it was not a permissible deduction and it had to be reloaded in the price of the excisable goods - appeal dismissed - decided against Revenue.

Summary

Issues:
- Appeal against setting aside Order-in-Original by Commissioner (A) and allowing the appeal of the assessee regarding deductions claimed from wholesale price for retail sale clearances.

Analysis:
The appeal was filed by the Department against the impugned order dated 31.3.2003, where the Commissioner (A) set aside the Order-in-Original and allowed the appeal of the assessee. The case involved manufacturers of footwear marketing their products through wholesale buyers and retail outlets. The dispute centered around deductions like trade discount, extra trade discount, and additional trade discount claimed from the wholesale price for retail sale clearances. The Department contended that these deductions were not permissible for retail sales. The Deputy Commissioner confirmed a differential duty demand, which was challenged by the assessee before the Commissioner (A), arguing that the assessable value for wholesale clearances should also apply to retail sale clearances. The Commissioner (A) accepted the assessee's arguments and set aside the Order-in-Original, leading to the present appeal by the Revenue.

The Revenue argued that the impugned order was not sustainable in law, emphasizing that different deductions claimed by the assessee for arriving at the assessable value for retail sales were conditional discounts not based on uniform trade practices. The Revenue disputed the Commissioner (A)'s reliance on the assessee's claim that wholesale price determination included additional trade discounts and extra trade discounts. On the other hand, the assessee defended the impugned order, citing a Supreme Court judgment that discounts need not be uniformly given to all customers to qualify for deduction under the Central Excise Act. By following the apex court's decision, the Tribunal upheld the impugned order, finding no infirmity in it and dismissing the Revenue's appeal.

In conclusion, the Tribunal upheld the impugned order by dismissing the Revenue's appeal, based on the settled legal position regarding the deduction of trade discounts for arriving at the assessable value under the Central Excise Act. The judgment highlighted the importance of business expediency in offering special trade discounts to wholesale buyers, emphasizing that lack of uniformity in trade discounts does not disqualify them from being excluded for determining the assessable value, as long as it is not based on extra-commercial considerations. The decision provided clarity on the permissible deductions and upheld the principles laid down by the Supreme Court in similar cases.