2018 (6) TMI 120

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....he audit that the respondents have supplied/distributed specific quantities of various medicines packs as free as a part of marketing strategy or as gifts along with the quantities of excisable goods which were charged for their sales on the rates specified in the invoices. On verification of the invoices for the period 2006-2007, it was noticed that the respondent has specifically mis-declared the said quantities of free supply/distribution as quantity discounts contrary to the provisions of the Section 4 read with CBEC supplementary instructions which stipulate that the discount has to be monetary and to be determined on any normal price payable for any transaction and therefore, these cannot be considered as a quantity discounts. In thes....

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....tended that it has no where been proved that the party to whom the goods were sold are related or had any other consideration except normal trade parlance. Regarding trade discount. They have further pleaded that trade discount @ 5%was given in the invoices and it was given to the customer for commercial consideration. It is observed that on the issue of non-inclusion of discounts in the transaction value, it has been clarified vide Circular No. 354/81/2000-TRU dated 30.6.2000that "the duty is chargeable on the net price paid or payable. Thus if in any transaction a discount is allowed on declared price of any goods and actually passed on to the buyer of goods as per common practice, the question of including the amount of discount in the t....

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.... value of excisable goods which are subject to duty on ad valorem basis." Since the goods in this case are subject to duty on ad valorem basis, the case of the appellants for admissibility of deduction on quantity discount allowed on account of free supplies is also squarely covered by the ratio of this decision of the Tribunal. 9. As regards the ground taken by the adjudicating authority that since, the discounts have been allowed selectively without any common practice and without evidence of any commercial considerations, the same are not eligible for deduction from transaction value, it is observed that it has been clarified in above cited Circular dated 30.6.2000 that "The new Section 4essentially seeks to accept different transacti....