Provisional assessment and post-clearance discounts: valid finalisation and deductible valuation adjustments where supported by records.

Provisional assessment may be treated as valid and capable of finalisation where the assessee applied for it, executed bonds and bank guarantees, disclosed the clearances in regular returns, and the department was aware of the arrangement; the absence of a formal permitting order was not decisive. Post-clearance discounts supported by the assessee's sales practice and returns were treated as deductible in determining assessable value, and the absence of a show cause notice weighed against sustaining the demand.

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Issues: (i) Whether provisional assessment could be treated as valid and finalised when no formal order allowing provisional assessment had been passed, and (ii) whether the assessee was entitled to deduction of post-clearance discounts from the assessable value.

Issue (i): Whether provisional assessment could be treated as valid and finalised when no formal order allowing provisional assessment had been passed.

Analysis: The assessee had applied for provisional assessment, executed bonds and bank guarantees, reflected the provisional clearances in regular returns, and later sought finalisation after the discount quantum became known. The absence of a formal order permitting provisional assessment was held not decisive where the assessee had acted on the provisional basis with due diligence and the department had been aware of the arrangement. The appellate finding treating the assessment as non-provisional merely because no order under Rule 9B was passed was found unsustainable, especially when no demand notice had been issued.

Conclusion: The provisional assessment was held to be validly adopted and capable of finalisation; the contrary view was rejected.

Issue (ii): Whether the assessee was entitled to deduction of post-clearance discounts from the assessable value.

Analysis: The discounts were given to buyers after clearance of goods and were supported by the assessee's sales practice and returns. The Tribunal accepted that such discounts were deductible while determining assessable value and rejected the contrary reasoning that had declined to follow the governing precedent. The absence of a show cause notice also weighed against sustaining the demand.

Conclusion: The assessee was held entitled to deduction of discounts from the assessable value.

Final Conclusion: The impugned order was set aside and the assessee's challenge succeeded in full.

Ratio Decidendi: Where the assessee has acted on a provisional assessment basis with departmental knowledge and the underlying valuation issue is supported by admissible discounts, the assessment cannot be denied finalisation merely for want of a formal permitting order, and the deductible discounts must be given effect in valuation.

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