2026 (1) TMI 208 - AT - Central Excise

Year-end, post-sale discount and excise assessable value u/s4(1)(a): discount not deductible; refund upheld.

Whether a one-time year-end discount could be mandatorily deducted from assessable value under s. 4(1)(a) of the Central Excise Act to treat the refund ... Claim of excess refund as provided under the N/N. 20/2007-CE, by purposely not availing the abatement of the year-end discount from the assessable value - liability of appellant to pay Central Excise Duty in terms of Section 4(1)(a) of the Excise Act - HELD THAT:- In the present case, the appellant had duly paid excise duty on the entire value of goods, which did not contain the year-end discount. It is noted that the year-end discount was provided as a one-time practise, in order to expedite the clearance or appropriation of the consideration towards such sale. As it was not a regular discount, it was not known prior to sale of the goods - the appellant would be eligible for deduction of the discount from the assessable value only if it is known and disclosed prior to sale of the goods. In the present case, this year-end discount was not known at the time of sale of the goods. Thus, this discount was not eligible for deduction from the assessable value. Accordingly, the appellant has rightly not availed the deduction of the discount and paid central excise duty on the entire transaction value of the goods - the submission of the appellant is agreed upon that the adjudicating authority cannot force them to avail a discount which was not entitled to them at the time of sale of the goods. It is found that in terms of N/N. 20/2007-CE, the appellant was eligible for refund of the duty paid by them. As payment was made towards the entire duty amount, the refund of the duty paid by the appellant had been correctly granted. Thus, there are no infirmity of the Ld. adjudicating authority granting the refund of the duty paid by the appellant as provided under N/N. 20/2007-CE. Accordingly, the Ld. appellate authority has erred in holding that excess refund was granted to the appellant. As the refund granted to the appellant was not erroneous, the impugned order holding the refund granted as excess and erroneous, set aside. The impugned order is set aside - appeal allowed. Issues: Whether the appellant wrongly obtained excess refund under Notification No. 20/2007-CE by not deducting a year-end discount from the assessable/transaction value, thereby resulting in excess refund.Analysis: Section 4(1)(a) requires central excise duty to be paid on the transaction value. A discount is deductible from assessable value only if it is known and disclosed prior to the sale; a year-end discount that was not known at the time of sale is not eligible for abatement from the transaction value. The appellant had paid duty on the full transaction value that did not reflect the undisclosed year-end discount. Under Notification No. 20/2007-CE, refund is available where duty has been paid. The proviso to Section 11A and allegations of erroneous refund turn on whether the discount should have been deducted at the time of assessment; here the discount was a post-sale practice not disclosed prior to sale and therefore not deductible when duty was paid.Conclusion: The refund granted under Notification No. 20/2007-CE was correctly granted; the appellate order holding that excess refund was granted is set aside and the appeal by the assessee is allowed.