Advance booking scheme discount is deductible from assessable value when bona fide, disclosed, and applied to a distinct class of buyers.

An advance booking scheme discount granted to dealers making advance payments was treated as an admissible deduction from assessable value for central excise purposes. The arrangement was described as a bona fide commercial scheme, communicated to the department, and applicable to a distinct class of buyers, with the assessee maintaining separate accounts and clearing goods on the discounted value. Settled principles on assessable value and admissible trade discounts, together with supporting departmental circulars and the finality of an earlier appellate order, supported deduction of the scheme discount. On that basis, the demand raised by denying the discount was not sustainable, and the associated penalty could not survive.

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Issues: Whether the advance booking scheme discount granted to dealers who made advance payments was deductible from the assessable value for central excise purposes, and whether the demand and penalties could be sustained.

Analysis: The discount scheme was an independent commercial arrangement communicated to the department and dealers, and the buyers opting for it constituted a special class of buyers. The assessee had been clearing goods on the discounted value, maintaining separate accounts, and paying duty on notional interest on advances. The earlier appellate order allowing deduction of the scheme discount had attained finality, and the departmental circulars supported deduction of cash discounts. The settled principles governing assessable value and admissible trade discounts also supported the assessee's claim. In these circumstances, the demand based on denial of the discount was not legally sustainable, and the associated penalty could not survive.

Conclusion: The discount under the advance booking scheme was an admissible deduction from assessable value, and the demand and penalties were unsustainable.

Ratio Decidendi: A scheme discount granted to a distinct class of buyers who make advance payments is deductible from assessable value when the arrangement is bona fide, communicated to the department, and supported by the settled law on admissible trade discounts.

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