CA Certificate on Discounts Using Actual Data Cannot Be Disregarded Without Reasoned Contradiction: CESTAT in Hawkins Case [Read Order]

In a recent ruling, the Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that a Chartered Accountant certificate on discounts prepared using actual data cannot be disregarded without a reasoned contradiction, while deciding excise valuation issues in the Hawkins Cookers case.

Hawkins Cookers Limited, the appellant, is engaged in the manufacture of pressure cookers and their parts at its factory in Hoshiarpur, Punjab. The finished goods were cleared on payment of central excise duty to multiple depots across the country. While pressure cookers were assessed under the MRP-based valuation scheme, parts of pressure cookers were assessed on transaction value under Section 4 of the Central Excise Act, 1944.

For the relevant periods, the appellant claimed deductions from the assessable value towards post-clearance discounts, including dealer discounts and discounts arising from national pricing policies. Since the exact quantum of discounts could only be determined at the end of the financial year, the appellant followed a consistent practice of submitting a Chartered Accountant certificate based on actual sales data, invoices, credit notes, and ledgers.

This practice had been accepted by the department in earlier years. For the periods under dispute, the department disallowed the discounts while finalising provisional assessments. The Commissioner (Appeals) upheld the disallowance, leading the appellant to approach the Tribunal.

The appellant argued that the discounts were actually passed on to buyers and were supported by Chartered Accountant certificates prepared using real transactional data. It was argued that the department had accepted the same method in prior and subsequent periods and had not raised any objection earlier. The appellant also pointed out that the issue had already been decided in its favour by the Mumbai Bench of the Tribunal in its own case.

The department argued that the discounts could not be allowed automatically and supported the findings of the impugned orders. It did not place any concrete material on record to show that the discounts certified by the Chartered Accountant were incorrect or not actually passed on.

The two-member bench comprising S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) observed that in the earlier decision in the appellant’s own case, the assessing authority had verified invoices, credit notes, and ledgers and had found that the discounts were genuinely passed on to customers. The tribunal observed that the Chartered Accountant certificate was based on actual data and factual verification.

The tribunal explained that such certificates cannot be brushed aside merely on suspicion or assumptions. It pointed out that if the department wanted to reject the certificate, it was required to provide a reasoned contradiction supported by evidence, which was absent in the present case.

In view of these findings, the tribunal allowed the appeal and held that the Chartered Accountant certificate on discounts using actual data was valid and the corresponding discount claims could not be disallowed.