Wednesday, September 2, 2015

Even un-availed cash discount is deductible if it is known prior to clearance of goods

Cash discount known at or prior to clearance of goods is to be deducted from sale price in order to arrive at value of excisable goods even if discount is not actually availed.



Facts:


a)  As per agreement buyers were eligible for 'cash discount'.


b)  Assessee claimed deduction of 'cash discount' in arriving at 'assessable value' even in cases where same was not actually availed of by buyers.

c)  Department argued that cash discount could be allowed only if it was actually allowed in price actually paid and not in cases where buyer did not avail of cash discount.

Supreme Court held in favour of assessee as under:


1)  On each removal of excisable goods, transaction value of such goods must be determined. Transaction value means the price actually paid or payable for the goods, when sold.

2)  Transaction value has to be read along with expression "for delivery at time and place of removal". Therefore, value of excisable goods on basis of transaction value has only to be at time of removal, that is, time of clearance of goods from assessee's factory or depot.


3)  Expression actually paid or payable for the goods, when sold means whatever is agreed to as price for goods forms basis of value, whether such price has been paid, has been paid in part, or has not been paid at all. Basis of transaction value is therefore agreed contractual price.
4)   Expression when sold is not meant to indicate time at which such goods are sold, but is meant to indicate that goods are subject matter of an agreement of sale. Hence, cash discount which is known at or prior to clearance of goods, being contained in agreement of sale between assessee and its buyers, must therefore be deducted from sale price in order to arrive at value of excisable goods at time of removal.

5)   Hence, cash discount was deductible for arriving assessable value of goods - Purolator India Ltd. v. Commissioner of Central Excise, Delhi-III [2015] 60 taxmann.com 471 (SC).
Post a Comment