Discount Claims Cannot Be Rejected on Assumption that Octroi Not Levied in Some States: CESTAT in Hawkins Cooker Case [Read Order]

In a recent ruling, the Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that discount claims cannot be rejected merely on the assumption that Octroi is not levied in some States, in the case concerning Hawkins Cookers Limited.

Hawkins Cookers Limited, the appellant, is engaged in the manufacture of pressure cookers and their parts at its factory in Hoshiarpur, Punjab. The goods were cleared on payment of excise duty to several depots across India. While pressure cookers were assessed on MRP basis, parts 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, which also included discounts linked to taxes such as Central Sales Tax, Octroi, and Entry Tax. These discounts were claimed based on actual sales and were supported by Chartered Accountant certificates. This method had been consistently followed and accepted by the department in earlier years.

During finalisation of provisional assessments for the disputed periods, the department disallowed certain discounts. One of the grounds taken by the department was that Octroi was not levied in some States and as such discounts claimed on account of Octroi were not admissible. The Commissioner (Appeals) upheld this view, leading the appellant to approach the Tribunal.

The appellant’s counsel argued that the discounts were claimed on actual basis and were supported by records and Chartered Accountant certificates. They argued that the department had not produced any data or figures to show that Octroi was not applicable in the States where the goods were sold. They also argued that discount claims cannot be rejected on assumptions or general statements without factual verification.

The department argued that Octroi is not levied uniformly across all States, so the discounts claimed on that account were not acceptable. The department supported the findings of the impugned orders but did not place any concrete evidence on record to substantiate the claim regarding non-levy of Octroi.

The two-member bench comprising S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) observed that the department’s objection was based only on assumptions and conjectures. The Tribunal observed that the impugned orders failed to establish with data or figures that Octroi was not levied in the relevant States.

The tribunal explained that discount claims supported by records and professional certification cannot be brushed aside on the basis of presumptions. It pointed out that in the absence of evidence to contradict the appellant’s claim, the department’s stand was unsustainable.

In view of these findings, the tribunal allowed the appeal and held that discount claims cannot be rejected merely on the assumption that Octroi is not levied in some States.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates