2004 (11) TMI 491 - AT - Central Excise

Summary

Issues: Application for waiver of pre-deposit of Central Excise duty and penalty based on the admissibility of cash discount.

Analysis:
1. Issue of Admissibility of Cash Discount:
The application filed by M/s. Sarda Papers Ltd. sought a waiver of pre-deposit of Central Excise duty and penalty amounting to Rs. 9,88,358/- each. The appellant argued that the duty was demanded and the penalty imposed due to the alleged failure to provide cash discounts to all customers. The appellant relied on a decision by the Bombay High Court in the case of M/s. Goodlass Nerolac Paints Ltd., which held that the deduction of cash discounts is permissible even if not availed by all customers. This argument was countered by the respondent, citing a Supreme Court decision in the case of M/s. Anant Raj Industries Ltd., which differentiated between quantity discounts and cash discounts. The Supreme Court ruled that quantity discounts are only available to buyers meeting specific criteria, unlike cash discounts, which are generally available.

2. Judicial Interpretation and Precedents:
The Tribunal considered the arguments presented by both parties. It noted that the Supreme Court's decision in M/s. Anant Raj Industries Ltd. pertained to quantity discounts, not cash discounts as in the present case. The Tribunal highlighted the distinction made by the Supreme Court between discounts dependent on purchasing quantities and those universally available. Additionally, the Tribunal referenced the Bombay High Court's decision, followed by the Tribunal in previous cases, supporting the admissibility of cash discounts even if not availed by all customers. Based on the prima facie case made by the applicants and in line with the precedents, the Tribunal granted a stay on the recovery of the entire duty and penalty amount during the appeal's pendency.

3. Final Decision and Stay Order:
The Tribunal, comprising Smt. Archana Wadhwa and Shri V.K. Agrawal, delivered the judgment on 4-11-2004, granting the stay on the recovery of the Central Excise duty and penalty while the appeal was pending. The decision was based on the interpretation of relevant legal precedents and the distinction between quantity discounts and cash discounts, ultimately favoring the appellant's position regarding the admissibility of cash discounts.