TMI Blog2013 (3) TMI 450X X X X Extracts X X X X X X X X Extracts X X X X ..... ibility of discounts but regarding payment of duty on the price charged by the Appellant at the time of clearance of the goods. Therefore, for permitting the deduction of trade discount, what is material is that it should be known and clearly understood prior to or at the time of removal and it is not necessary that it should be quantified and given to the buyer only at the time of removal. Thus the Department’s contention is that while the trade discounts claimed are admissible the deduction from assessable value is not permissible, as the discounts were not passed on to buyers at the time of clearance but later on by issue of credit notes. - Decided in favor of assessee. - E/1834/2005 - A/745/2012-EX(BR)(PB) - Dated:- 3-7-2012 - J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 11AB of the Central Excise Act, 1944; and (b) imposition of penalty on the Appellant under Section 11AC ibid. 1.2 The above show cause notice was adjudicated by the Assistant Commissioner vide order-in-original dated 21-4-2004 by which the duty demand, as made in the show cause notice was confirmed and penalty of equal amount was imposed on the Appellant. The Assistant Commissioner in this order held that no evidence of the discounts, whose deduction has been claimed, having been passed on to the customers, has been furnished and in this regard, the credit notes issued by the Appellant to their customers is not sufficient evidence. 1.3 The above order passed by the Assistant Commissioner was upheld by CCE (Appeals) vide o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction from the assessable value, that in terms of Apex Court s judgment in the case of UOI v Bombay Tyre International Ltd. reported in 1984 (17) E.L.T. 329 (S.C.) the deduction of trade discount is to be permitted if the same are given under the terms of the sale or by established practice and the nature of the discounts is known at or prior to removal of the goods and such discounts are not to be disallowed only because the same are not payable at the time of each invoice or deducted from invoice price, that the ground for disallowing the deduction of trade discount as mentioned in para 4 of the show cause notice noticee have not produced any evidence which could establish that the discounts availed from the assessable value have been p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the assessable value. However, these discounts were not given at the time of clearance - instead these were passed on to the customers later on in form of credit notes. However, the Section 4(d)(ii) of the Central Excise Act, 1944 envisages that deduction of only those discounts, which are known at the time of clearance and one actually passed on to the customers, are admissible . 4. The noticee were requested by the jurisdictional range office to submit evidence that the discounts were passed on at the time of clearance, but the noticee have not produced any evidence which could establish that the discounts availed from assessable value have been passed on to the customers, at the time of clearance . 5. Therefore it appears that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt has held thus :- Trade Discounts. - Discounts allowed in the Trade (by whatever name such discount is described) should be allowed to be deducted from the sale price having regard to the nature of the goods, if established under agreements or under terms of sale or by established practice, the allowance and the nature of the discount being known at or prior to the removal of the goods. Such Trade Discounts shall not be disallowed only because they are not payable at the time of each invoice or deducted from the invoice price. 7. Therefore, for permitting the deduction of trade discount, what is material is that it should be known and clearly understood prior to or at the time of removal and it is not necessary that it should be qua ..... X X X X Extracts X X X X X X X X Extracts X X X X
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