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).
