HINDUSTAN LUBRICANTS Vs. CCEX

JUDGEMENT

(1.) HEARD both sides. The dispute in this case is whether prompt payment cash discount is a permissible deduction from the assessable value under Section 4 of the Central Excise Act, 1944. Both sides agree that in respect of cases where such discount has actually been availed and passed on to the customers, the department has allowed the deduction. However, the department has not allowed the deduction in such cases where the discount has not been actually availed. The lower appellate authority has followed the decision of the Hon'ble High Court of Bombay in the case of Hindustan Mineral Products Co. Pvt. Ltd. v. Union of India , which held that prompt payment cash discount is allowable only in respect of transactions in which such discount is actually availed by the customers and not across the board.

(2.) THE learned Advocate for the appellants states that there is a contrary decision by the Hon'ble High Court of Bombay in the case of Goodlass Nerolac Paints Ltd. v. Union of India 1993 (65) ELT 186 (Bom) in which it has been held that such prompt payment cash discount is admissible for deduction irrespective of whether each customer availed of it or not. He further states that this decision of the Hon'ble Bombay High Court was followed in the case of CCE, Bangalore v. H and R Johnson (India) Ltd. by the Tribunal and a Civil Appeal against the same has been dismissed by the Hon'ble Supreme Court vide Commissioner v. H.R. Johnson Ltd. 2000 (119) ELT A239 (SC).

(3.) IN view of the fact that there are two contrary decisions of the same High Court and that the one favourable to the appellants was followed in a Tribunal's decision and the Apex Court has dismissed a civil appeal against the said Tribunal's decision, we allow the appeal following the said decision even though the prompt payment cash discount has not been availed of in respect of these transactions. (Pronounced in Court)