1986 (9) TMI 317 - AT - Central Excise

Summary

Issues Involved:
1. Admissible discount on goods sold to distributors.
2. Assessable values of goods sold to M/s. Mico and Caltex.
3. Whether varying discounts allowed on normal commercial considerations to different customers in one and the same class of buyers qualify for exclusion in the computation of their assessable value.
4. Whether the maximum or minimum of such discounts, or each such discount at actuals in the different transactions, should be excluded in the computation of the assessable value.

Detailed Analysis:

1. Admissible Discount on Goods Sold to Distributors:
The appellants, manufacturers of auto lamps, sell their goods to four distributors at varying discount rates. The main issue is whether a discount of 35.57% for Delhi and Madras distributors and 30.35% for Bombay and Calcutta distributors is admissible. The two learned Members differed on whether the minimum discount of 30.35% should be applied uniformly to all distributors or if each actual discount should be allowed.

2. Assessable Values of Goods Sold to M/s. Mico and Caltex:
Both Members agreed that the assessable values should be the prices at which the goods were sold to M/s. Mico and Caltex, not the prices at which they subsequently sold the goods. This issue was resolved by the Bench and does not form part of the reference to the President.

3. Whether Varying Discounts Allowed on Normal Commercial Considerations to Different Customers in One and the Same Class of Buyers Qualify for Exclusion in the Computation of Their Assessable Value:
The President examined various authorities and judgments. The key judgments cited by the appellants included:
- Union of India v. Jyoti Ltd.: Held that trade discounts need not be uniformly given.
- Gujarat State Fertilizers Co. Ltd. v. Union of India: Observed that there is no warrant for implying that a trade discount would be a permissible deduction only if it is allowed uniformly.
- Union of India v. S.S.M. Bros. Pvt. Ltd.: Referenced the Supreme Court's decision in Voltas Ltd., which held that trade discounts need not be uniform.

However, the President noted that these judgments did not support the specific proposition that different prices to the same class of consumers under the same conditions were acceptable in terms of the unamended Section 4.

4. Whether the Maximum or Minimum of Such Discounts, or Each Such Discount at Actuals in the Different Transactions, Should Be Excluded in the Computation of the Assessable Value:
The President concluded that for the same goods under the same conditions, only one assessable value would be acceptable. Therefore, varying discounts leading to varying assessable values would not be acceptable. The minimum discount, leading to the maximum net price, should be applied uniformly to all distributors.

The President's decision was based on:
- The language of Section 4, which indicates a single price.
- The Self Removal Procedure, which relies on a single approved price-list for assessment.
- Precedents such as the Tribunal's decision in the Standard Autoparts case, which supported a single assessable value.

Conclusion:
The appeal was allowed partly regarding the assessable values of goods sold to M/s. Mico and Caltex, with the value being the price at which the goods are sold to the brand name owners. The appeal concerning varying discounts was dismissed. It was held that only the minimum discount should be excluded in the computation of the assessable value, thus confirming the order of the Appellate Collector.

Final Order:
In accordance with the majority view, the appeal is allowed partly regarding the assessable values of goods manufactured for others like M/s. Mico. The value will be the price at which the goods are sold to the brand name owners. The appeal concerning varying discounts allowed on normal commercial considerations to different customers in the same class of buyers is dismissed, confirming that only the minimum discount is to be excluded in the computation of the assessable value.