Assessable value deductions require recognised trade discount practice; packing container costs and ad hoc freight reductions were disallowed.
Cost of primary packing forms part of the assessable value of excisable goods, so the expense on metal containers used for packing was not excludible. The amount described as a "trade discount of freight" was deductible only if supported by established trade practice or the terms of sale; because it was merely an ad hoc reduction in freight charges per container and not shown to be a recognised trade discount, it was also not deductible. The claimed exclusions from assessable value were therefore disallowed on both issues.
Issues: (i) Whether the cost of metal containers used for packing the excisable goods was excludible from assessable value; and (ii) whether the amount described as "trade discount of freight" was deductible as a trade discount.
Issue (i): Whether the cost of metal containers used for packing the excisable goods was excludible from assessable value.
Analysis: The cost of primary packing is includible in the assessable value of excisable goods. The expense on metal containers used for packing was therefore not eligible for exclusion.
Conclusion: The claim for exclusion of the cost of metal containers was rejected.
Issue (ii): Whether the amount described as "trade discount of freight" was deductible as a trade discount.
Analysis: A trade discount is deductible only if it is recognised by established trade practice or by the terms of sale, and the description used in the documents is not decisive. The amount in question was an ad hoc reduction of freight charges per container and was not shown to be a trade discount in commercial parlance or by established practice.
Conclusion: The amount described as "trade discount of freight" was not deductible from the assessable value.
Final Conclusion: The appeal failed on both issues, and the exclusion claimed from assessable value was disallowed.
Ratio Decidendi: For deduction from assessable value, the substance of the allowance must be shown to be a recognised trade discount by established practice or terms of sale, and the mere label given to a charge or deduction is not controlling.
TaxTMI 
AI Drafter ✕
TaxTMI 
