Job-work excise valuation: known quantity discount cannot be denied for lack of sale, and duty cannot be demanded twice.

In excise valuation of job-work clearances, quantity discount known at the time of removal could not be disallowed merely because the clearance was not an actual sale. The assessable value had to reflect the processed goods in the hands of the processor, with manufacturing cost, expenses and profit accounted for under settled valuation principles. Duty having already been discharged on the entire quantity cleared, including the free-supply quantity, a further demand on the discounted quantity was impermissible and would amount to double taxation. The assessee succeeded, and the impugned order was set aside with consequential relief.

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Issues: Whether, in job-work clearances of medicines valued on the basis of settled excise valuation principles, quantity discount reflected at the time of clearance could be disallowed on the ground that no sale took place, and whether duty could again be demanded on the discounted quantity.

Analysis: The valuation adopted by the assessee was held to be consistent with the principles governing job-work valuation, as the assessable value had to reflect the value of the processed goods in the hands of the processor, with manufacturing cost, expenses and profit duly accounted for. The reasoning that absence of an actual sale automatically disentitled the assessee from claiming quantity discount was rejected, because the clearance was to be viewed on the basis of a deemed factory gate under settled excise law. The record also showed that the quantity discount was known at the time of clearance and duty had already been discharged on the entire quantity cleared, including the free-supply quantity.

Conclusion: The disallowance of quantity discount was unsustainable, and the demand of duty on the same quantity would amount to double taxation; the assessee succeeded.

Final Conclusion: The impugned order was set aside and both appeals were allowed with consequential relief.

Ratio Decidendi: In excise valuation of job-work clearances, a discount known at the time of removal cannot be denied merely because the transaction is not an actual sale, and duty cannot be demanded again on quantity already subjected to duty.

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