Central excise valuation: turnover discount and prompt-payment cash discount remained deductible as part of the sale terms.

Turnover discount remained deductible in central excise valuation where its availability and commercial nature were known at the time of clearance, even though the exact amount was quantified and paid later. Cash discount for prompt payment was also deductible because it formed part of the sale terms and was not an amount to be added back to assessable value merely because only compliant customers received it. The impugned order allowing both deductions was sustained, and the departmental appeal failed.

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Issues: (i) Whether turnover discount, quantified and paid at the end of the year but known at the time of removal, was deductible in determining assessable value under central excise law; (ii) whether cash discount available for prompt payment was deductible only to the extent actually passed on to customers.

Issue (i): Whether turnover discount, quantified and paid at the end of the year but known at the time of removal, was deductible in determining assessable value under central excise law.

Analysis: The discount was held to be an allowable deduction where its availability and nature were known at the time the goods were cleared, even if the exact amount was determined later. The ruling followed the settled position that such a discount forms part of the commercial arrangement and does not lose deductibility merely because quantification occurs subsequently.

Conclusion: Turnover discount was admissible as a deduction.

Issue (ii): Whether cash discount available for prompt payment was deductible only to the extent actually passed on to customers.

Analysis: The discount was treated as a genuine discount linked to prompt payment and not as an amount required to be added back to assessable value. The decision accepted that where the discount scheme is part of the terms of sale and is not extended to defaulting customers, the deduction remains allowable.

Conclusion: Cash discount was admissible as a deduction.

Final Conclusion: The impugned order allowing deduction of both turnover discount and cash discount was sustained, and the departmental appeal failed.

Ratio Decidendi: A discount known at the time of removal remains deductible for valuation purposes even if quantified later, and a prompt-payment cash discount is deductible when it is part of the sale terms and not a post-clearance addition to price.

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