Deduction of trade discount- valuation central excise

Trade discount etc

This is allowed as deduction.  board circular cited on page 1.41 ‘valuation.  Court decisions also cited on same page.  Other discounts like cash discount also admissible.

Discount is subject to general rules viz. this should be in ordinary course of business, parties not related etc. Thus if discount is more than that generally allowed in trade in ordinary course, the unreasonable amount will be disallowed.

All discounts paid to buyer are allowed. Commission or discount given to commission agents etc. not allowed.

2011 (272) E.L.T. 385 (Tri. - Mumbai)

GLENMARK PHARMACEUTICALS LTD.

Versus

COMMISSIONER OF C. EX., NASIK

Valuation (Central Excise) - Trade discount - Quantity discount given in the form of free quantities - Duty paid on full quantities without taking into account the quantity discount claimed by way of refund - Refund claimed rejected as quantity discount not mentioned in the invoice - Issue of invoices at the time of clearances not necessary when quantity discount given at the time of sales from depot - Turnover discount permissible even if quantities are quantified on half-yearly basis - Duty on free quantities paid as per depot invoices - Rejection of refund claim set aside and case remanded for de novo application in accordance with Supreme Court decision in Madras Rubber Factory [1995 (77 E.L.T. 433 (S.C.)]. [para 7]

2011 (269) E.L.T. 394 (Tri. - Mumbai)

COMMISSIONER OF C. EX., RAIGAD

Versus

RAPTAKOS BRETT & CO. LTD.

Valuation (Central Excise) - Free replacement of breakage - Period involved prior to 12-9-2000 - Department’s case that decision of Apex Court in Surya Roshni Ltd. [2000 (122) E.L.T. 3 (S.C.)] not allowing such deduction is retrospective - Supreme Court decision not relevant as there was no precedent decision in appellant’s own case there - Presently Tribunal decision available in assessee’s own case holding that such deduction permissible - Decision accepted by Department - Deduction available till decision of Apex Court in Surya Roshni Ltd. - Revenue’s appeal rejected - Section 4 of Central Excise Act, 1944. [para 6]

2011 (263) E.L.T. 477 (Tri. - Del.)

COMMISSIONER OF C. EX., CHANDIGARH

Versus

GOETZE (INDIA) LTD.

Valuation (Central Excise) - Turnover discount - Depot sales - Duty paid at time of clearance from factory at price prevalent at depot claiming deduction towards turnover discount at average rates - Exact discount finalised at year end - Deduction assailed as discount not given at time of sale but determined at later date - Supreme Court in Madras Rubber Factory [1995 (77) E.L.T. 433 (S.C.)] for provisions as they stood before 1-7-2000, held that discounts known at time of removal permissible even if quantified later - Present Section 4 of Central Excise Act, 1944 though not having specific provision for trade discount deduction, concept of transaction value by very nature would include such deduction - No contention that deduction not permissible at all - No legal provision that for permitting trade discount, same has to be passed to buyers at time of sale - Deduction however permissible to the extent actually passed, which not discussed earlier - Matter remanded - Section 4 ibid. [para 3.1]