TaxTMI 
TaxTMI 
2026 (5) TMI 433
X X X X Extracts X X X X
X X X X Extracts X X X X
.... finalization of provisional assessments. 1.2 The facts briefly stated are that the appellants are engaged in the manufacture of branded jewellery under the brand name "Tanishq" and were clearing the same on payment of central excise duty; since there was no ex-factory sale, the goods were stock transferred to company-owned showrooms, appointed management agents and franchisees for sale to end customers, and in view of such marketing pattern and fluctuating gold prices, the appellants adopted provisional assessment under Rule 7 of the Central Excise Rules by determining value based on cost of gold and making charges and claiming abatement towards discounts and sales tax based on actual realization at the point of sale. At the stage of finalization of provisional assessments, the appellants furnished detailed sales data along with Chartered Accountant certificates certifying the quantum of discounts actually passed on; however, the adjudicating authority rejected the abatement on the ground that transaction-wise correlation and documentary evidence for each clearance were not produced, and the Commissioner (Appeals) upheld such denial mainly on the reasoning that the entire stock....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iled to produce transaction-wise documentary evidence linking clearance invoices with sale invoices and therefore the claim of abatement cannot be accepted. It is further argued that Chartered Accountant certificates cannot substitute statutory requirements of proof. The Revenue contends that in the absence of precise data, the adjudicating authority was justified in denying the abatement and confirming duty on the full value. 6. We have carefully heard the submissions advanced by both sides, examined the appeal records in detail, and considered the statutory provisions and the case laws cited. 7. Upon consideration the following questions arise. i. Whether the denial of abatement towards discounts is legally sustainable in the absence of transaction-wise correlation? ii. Whether the evidence produced by the appellants, including Chartered Accountant certificates and consolidated sales data, is sufficient to establish the claim of abatement and whether the methodology adopted by the Department in denying the same is legally sustainable? 8. We now proceed to examine the issues arising for determination in the present appeal, one by one, seriatim. Issue ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the appellants, including Chartered Accountant certificates and consolidated sales data, is sufficient to establish the claim of abatement and whether the methodology adopted by the Department in denying the same is legally sustainable. This issue cannot be examined in isolation from the nature of the appellant's business and the practical limitations inherent therein. 10.2 The appellants have consistently contended that in a business model involving stock transfers to multiple locations and subsequent retail sales over a period of time, it is inherently impossible to establish one-to-one correlation between each clearance from the factory and the corresponding sale at the showroom level. This contention merits acceptance. The law does not compel performance of an impossible act, and the insistence by the Department on strict transaction-wise correlation, despite acknowledging the existence of voluminous data running into lakhs of entries, amounts to imposing an impracticable and unreasonable condition which cannot be sustained in law. 10.3 It is equally well settled that in matters of valuation, mathematical precision is neither expected nor required. Where exact quantificat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ny alternative workable method, and has instead proceeded to deny the entire abatement. 10.7.1 In this context, reliance placed by the appellants on the judgment of the Hon'ble Supreme Court in CIT v. B.C. Srinivasa Setty & Others 1981 2 SCC 460 assumes significance, wherein it has been held that where the machinery provision for computation fails, the charging provision itself cannot be applied. Applying the said ratio to the facts of the present case, when the Department itself acknowledges the impracticability of verifying lakhs of transactions and yet fails to adopt any reasonable method of determination, the denial of abatement on the ground of lack of precise computation becomes legally unsustainable. 10.7.2 We find that though the aforesaid decision in CIT v. B.C. Srinivasa Setty (Supra) arises under the provisions of the Income Tax Act, the principle laid down therein is of general application and is not confined to the said statute. The Hon'ble Supreme Court, in the said decision, enunciated a fundamental principle of fiscal jurisprudence, namely, that a charging provision cannot be applied in the absence of a workable machinery provision for computation of the tax l....