Hi everyone,
Our company has allowed cash discount to all our buyers, with the condition being that the bill is to be cleared by 15th of the specified month. Further, we have paid the Central Excise duty on the premise that cash discount is allowable as deduction, if actually passed on to buyer, if transaction is on principal to principal basis. Reliance is placed on CBE&C Circular No. 643/34/2002-CX dated 01-07-2002.
However, the issue which arises is whether we can net off ( the net method of accounting for cash discounts requires adjusting entries for discounts taken) the cash discount and pay central excise on that netted off amount, instead of recalculating the duty again. As far as I remember, there was a judgment in 2010/11 which said the same is permitted. Support of a case law to support this would be helpful.
Regards,
Ashmita
CAclubindia
