The Kolkata Bench of the Customs, Excuse and Service Tax Appellate Tribunal ( CESTAT ) ruled that the admissibility of discounts subsequent to clearance is eligible deduction for the determination of assessable value.
The appellants have filed the impugned appeal assailing the order passed by the Commissioner of Central Excise and Service Tax, Bolpur whereby he has confirmed the demand of Rs.7,51,62,600/- (Rupees Seven Crore Fifty One Lakh Sixty Two Thousand and Six Hundred only) under Section 11A(10) [erstwhile Section 11A(2)] of the Central Excise Act, 1944 along with interest under Section 11AA of the Act, besides imposition of penalty of equal amount under Section 11AC of the Act.
The short question in the impugned appeal concerns the alleged contravention of the provisions of Rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 read with Section 4(1)(b) of the Act.
The Advocate, Rahul Tangri, appearing on behalf of the appellant, submitted that the rebate is allowed in the normal course of trade, both on direct sales as well as dispatches to the stockyards and is not refundable by the buyers. Also it is shown separately on the invoices issued under Rule 11 of the Central Excise Rules, 2002.
P.K. Ghosh, Authorized Representative for the Revenue, however supportted the adjudication order and submits that the price adopted for the purpose of valuation by the appellants cannot be construed as the normal transaction value for the reasons as enumerated hereinabove.
A Two Member Bench comprising Ashok Jindal, Judicial Member and Rajeev Tandon, Technical Member observed that “With regard to valuation of the goods is quite clear and in terms of the law, the valuation of goods under clearance is to be done on the basis of sale price prevailing on the date of removal at the time of removal, which in the present case is the depot.”
The Bench relied on the judgment of the Apex Court’s decision in the case of Purolator India Ltd. v. Commissioner of Central Excise, Delhi has also upheld the admissibility of discounts that were passed on to the buyers and were known at the time of clearance of goods as eligible deduction for the purpose of determination of the assessable value.
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