2016 (7) TMI 470 - AT - Central Excise

Tribunal Allows Deduction of Turnover Discounts Passed to Buyers

The Tribunal upheld the admissibility of turnover discounts, emphasizing that discounts can be deducted even if quantified later, as long as they are ... Valuation of - deduction of discount offered from the depot / from the stockiests and sub stockiests - claim was rejected on the ground that the respondents failed to supplied the true and correct figures of TOD passed on to their buyers in respect of clearances effected from their factory. - Commissioner (Appeals) allowed the claim - Held that:- Since the Commissioner (Appeals) has given specific finding to the effect that he has found respondents have actually passed on the benefit of turnover discount to the eligible stockiest and sub-stockiests by raising credit notes. We find that there is no evidence whatsoever in the grounds of appeals to substantiate the challenge made to specific averments made by the Commissioner (Appeals). - Decided against the revenue. Issues:Admissibility of turnover discounts and passing on of discounts to buyers.Analysis:The case involved the respondents, manufacturers of engine parts, providing discounts to buyers based on turnover, leading to provisional assessment due to the uncertainty of turnover until the year-end. The Assistant Commissioner denied the deduction of turnover discounts, citing reasons like discounts not being offered at depots and lack of true figures of discounts passed on to buyers. The Commissioner (Appeals) set aside the order, noting that buyers were aware of the discount scheme before goods clearance and that the discounts were indeed passed on, supported by a CBEC circular. The AR argued against deductions at the factory gate due to year-end discount provision and lack of evidence of discounts passed on. The Tribunal referred to a previous judgment in the respondent's case, emphasizing the permissibility of turnover discounts even if quantified later, as long as they are passed on to buyers. The Tribunal upheld the admissibility of turnover discounts and found no evidence challenging the Commissioner (Appeals)'s specific findings on discounts being passed on, leading to the dismissal of the Revenue's appeal.