2005 (3) TMI 614 - AT - Central Excise

Summary

Issues:
1. Denial of special commission of 15% on the net sale price to M/s. Mehta Trading Company (MTC).
2. Eligibility of the special discount of 15% granted to MTC.
3. Comparison with a similar case involving M/s. Sri Bhavani Castings Ltd.
4. Justifiability of the demands confirmed by the adjudicating authority.

Analysis:
1. The appellant challenged the denial of a special commission of 15% on the net sale price to MTC. The Department issued demands for the earlier and subsequent periods, which were confirmed by the adjudicating authority. However, the Commissioner (Appeals) allowed the appeals and upheld the grant of the special discount. The Department argued that the discount was actually a commission under the disguise of a trade discount, not disclosed under Rule 173C(3A), and should be loaded to the assessable value.

2. The learned Counsel contended that the special discount of 15% to MTC was due to their bulk quantity purchases, not as a commission. The Commissioner (Appeals) found no evidence supporting the commission theory and noted the distinct nature of transactions with MTC. Reference was made to a similar case involving M/s. Sri Bhavani Castings Ltd. where a special discount was upheld by the Tribunal, indicating a precedent for the present case.

3. The Tribunal examined the facts and legal aspects deeply, finding that the special discount to MTC was based on contractual terms for higher stock purchases. Precedents from other cases like Whale Stationery Products Ltd., Electrolux Kelvinator Ltd., and Voltas Ltd. were cited, supporting the dropping of demands by the Commissioner (Appeals). The ruling in the case of Sri Bhavani Castings Ltd. was applied to the present case, emphasizing the justifiability of the special discount.

4. The Department defended its position, arguing that the 15% discount was akin to a commission and justified the demands. However, the Tribunal concluded that the special discount was legitimate, considering the contractual obligations and higher stock purchases by MTC. The Tribunal set aside the impugned order and allowed the appeal, following the established legal principles and precedents.

In conclusion, the judgment upheld the grant of the special discount of 15% to MTC, rejecting the Department's contention that it was a commission. The decision was based on contractual terms, past rulings, and the absence of evidence supporting the commission theory.