Excise Duty Deduction for Discount to Dealers at the Time of Clearance of Goods from Depot: CESTAT allows Provisional Assessment [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi bench has allowed a provisional assessment requested by the assessee in order to claim excise duty deduction towards discount provided to dealers at the time of clearance of goods from depot.

The respondent, J K Tyres was aggrieved by the order rejecting request for provisional assessment and claimed that the factum of availability of these discounts was known to the dealers before clearance of the goods but on account of the very nature of the discounts, the same cannot be quantified when the goods are sold from the depots to the dealers and quantification of these discounts is done at a later point of time. It is for this reason that the respondent made a request for provisional assessment for the financial year 2017-18.

The department issued a show cause notice to the respondent for the financial year 2017-18 and later  rejected the request for provisional assessment. Feeling aggrieved, the respondent filed an appeal before the Commissioner (Appeals), who allowed the appeal after placing reliance upon the Board Circular dated June 30, 2016. The department approached the Tribunal for relief.

Relying on the past orders wherein similar issues were adjudicated, the Tribunal comprising Justice Dilip Gupta, President and Mr. P.V.Subba Rao, Member (Technical) observed that though the availability of the discounts was known at the time of clearance of the goods, these were quantified later but are to be deducted from transaction value.

The Tribunal, in the earlier order, held that “at the time of clearance of goods, since there is no quantification of demand, provisional assessment needs to be resorted to. This is also in line with the Board’s Circular dated 30.06.2000. Thus, we are of the opinion that rejection of the request for provisional assessment was incorrect and unsustainable in law and the learned Commissioner (Appeals) has rightly set aside the order passed by the learned Assistant Commissioner, rejecting the request for provisional assessment.”

Relying on the above orders, the Tribunal held that “the two decision of the Tribunal, on which reliance has been placed by learned authorized representative appearing for the department, would not be applicable in the present case as they do not deal with discounts which though known at the time of clearance of the goods cannot be quantified at that stage and are quantified later.”

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