2026-VIL-773-CESTAT-CHE-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Denial of abatement towards discounts for failure to provide one-to-one correlation between clearances and sales – Appellant adopted provisional assessment to determine the value based on the cost of gold and making charges, and claimed abatement towards discounts and sales tax based on actual realization at the point of sale - Department rejected the abatement on the ground that transaction-wise correlation and documentary evidence for each clearance were not produced. The Commissioner (Appeals) upheld the denial on the reasoning that the entire stock transferred may not have been sold within the same year and that one-to-one correlation between clearances and sales was not established – HELD – The insistence on one-to-one correlation is not only impractical but also contrary to the commercial realities of the appellant's business model, where the goods are not sold at the factory gate but are stock transferred to multiple locations and sold over a period of time. The Supreme Court in Union of India v. Bombay Tyres International Ltd., held that trade discounts actually passed on to buyers are admissible deductions and must be considered while determining the assessable value. The requirement of transaction-wise correlation cannot be elevated to a rigid condition so as to defeat the substantive benefit, and that reasonable methods of determination must be accepted where compliance with such requirement is impracticable due to the nature of the trade - The evidence produced by the appellants, including CA certificates and consolidated sales data, is sufficient to establish the claim of abatement, and that the methodology adopted by the Department in denying the same is legally unsustainable - The denial of abatement solely on the ground that the evidence is not in a particular format amounts to elevating procedural requirements above substantive entitlement, which is impermissible. The Department's approach of denying the entire abatement without suggesting any alternative methodology is arbitrary and disproportionate – The impugned order is set aside and the appeal is allowed
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GSTAT Appeal filed wrongly...
By CA Vivek Jalan

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