By TIOL News Service

NEW DELHI, SEPT 27, 2016: ON a request made by the appellant, Revenue ordered provisional assessment under Rule 7 of the CER, 2002. The ground on which the provisional assessment was ordered was that the appellant was claiming various types of discounts such as cash discount, quarterly and annual turnover discount etc. and though the fact of extending these discounts were known at the time of removal, the actual quantification could be arrived at only after achieving the sales target.

The provisional assessment was finalised by the Assistant Commissioner by holding that the appellant will not be entitled to the deduction of discounts in respect of goods sold from their depot after their clearance from the factory.

As this order was approved by the Commissioner (Appeals),the appellant is before the CESTAT.

The Bench, after considering the submissions, observed -

++ Section 4(1)(a) of the CEA is not applicable because at the time of initial clearance of goods from the factory to the Depot there is no sale involved. Such cases would come under Rule 7 of the Valuation Rules.

++ The benefit of deduction of all types of discounts from the value will be available as long as the price and the discounts are known before clearance of goods from the factory.

++ There is no dispute that the fact that various types of discounts are being allowed is very well known. The fact that the discounts are being given is known but the quantum is not determinable at the time of clearance of goods from the factory.

++ The apex court in the Purolator case - 2015-TIOL-193-SC-CX has held that duty needs to be charged at the transaction value which was the agreed contractual price. Any discounts which are part of the agreement of sale will need to be granted even if such discounts are not passed on.

++ In the present case the place of removal is not the factory gate but the depot of the appellant. Under such circumstances the discounts allowed in the price contracted for sale from the depot would be allowable as a deduction from such price.

The impugned order was set aside and the appeal was allowed with consequential relief. =

(See 2016-TIOL-2527-CESTAT-DEL)