By TIOL News Service

NEW DELHI, MAY 01, 2017: DURING the period (16.04.98 to 28.02.1999) the appellant was engaged in the manufacture and clearance of watches in its own brand name. These watches were sold through various distributors / showrooms. The respondent had given "cash discount" and "performance incentives" to the distributors under the discount scheme.

Such discounts were sought as deduction from the Assessable value but were disallowed by the department. However, in appeal, the Commissioner (Appeals) had allowed the same.

And this order dated 21.06.2006 was appealed by Revenue before the CESTAT.

The matter was heard recently.

The respondent raised a preliminary objection that the appeal has been filed without the approval of the Review Committee of the Commissioners and, therefore, is not maintainable.

The CESTAT overruled the preliminary objection raised by the respondent in view of the Larger Bench decision in Japan Airlines International Co. Ltd. = 2015-TIOL-1645-HC-DEL-ST-LB and admitted the appeal.

As for merits of the case, the Bench observed thus -

+ It appears that the Commissioner (Appeals) has followed the ratio laid-down in the case of Bombay Tyres = 2002-TIOL-33-SC-CX-LB for allowing the claim of the assessee, where it was observed that - "whatever name discount is described should be allowed to be deducted from the sale, it must be trade discount."

+ The "cash discount" was given for prompt payment and "performance incentive" for uplifting of the watches from the factory. Both the incentives are to promote the business of the respondent and the same was in accordance with the maximum retail price and comes under the trade discount.

Noting that claiming deduction from assessable value of such discounts is permissible in law as per the ratio laid down by the Supreme Court (supra), the Revenue appeal was dismissed.

(See 2017-TIOL-1444-CESTAT-DEL)