Annual trade discount deductible from assessable value where the discount formed part of the sale arrangement and was known at clearance.

An annual trade discount fixed at a specified rate per carton and disclosed as a sale condition on the invoices was treated as part of the commercial arrangement at the time of clearance. Because dealers were aware of the discount when the goods were sold, the discount was not contingent in a way that justified denial of deduction. The annual trade discount was therefore deductible from the assessable value, and the disallowance was set aside.

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Issues: Whether the annual trade discount claimed by the assessee was deductible from the assessable value.

Analysis: The discount was fixed at a specified rate per carton and was computed and paid after the end of the year. It was recorded as a sale condition on the reverse of the invoices, so the dealers were aware of it at the time of clearance. On that basis, the discount formed part of the commercial arrangement at the time of sale and was not contingent in a manner that would justify denial of deduction.

Conclusion: The annual trade discount was deductible from the assessable value and the disallowance was set aside.

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