1994 (10) TMI 145 - AT - Central Excise

Summary

Issues:
1. Whether different discounts can be allowed to customers belonging to the same category of buyers.
2. Whether trade discount should be allowed in cases where there is no uniformity in discount.
3. Whether the conditions for admissibility of trade discount under Section 4(4)(d)(ii) of the Central Excises & Salt Act, 1944, require uniformity.

Analysis:
1. The appellants, engaged in manufacturing PCB Drills, filed price lists for clearance of goods with different deductions for sales to Government agencies and private buyers. The Assistant Collector allowed deductions for sales to Government agencies but disallowed deductions for sales to private buyers, citing non-uniformity in discounts. The Collector (Appeals) upheld this view, emphasizing uniformity among the same class of buyers. The appellant's Counsel argued that different discounts based on commercial considerations should be allowed, citing relevant case law. The Tribunal held that industrial consumers can be further classified, allowing for different normal prices for different buyers within the same class, provided the contracts are genuine.

2. The issue of whether trade discount should be allowed despite non-uniformity was addressed. The Tribunal emphasized that trade discounts need not be uniform and can vary based on commercial exigencies. Section 4(4)(d)(ii) of the Act specifies conditions for admissibility of trade discount, but uniformity is not a mandated condition. The Tribunal highlighted that different assessable values due to varying discounts do not affect the admissibility of trade discount. It concluded that trade discount is permissible even if not uniform, as long as it complies with statutory conditions and is based on commercial considerations.

3. The Tribunal examined the conditions for admissibility of trade discount under Section 4(4)(d)(ii) of the Act. It clarified that the Act does not require uniformity in trade discounts and that imposing such a condition would be extra-legal. The Tribunal emphasized that different rates of trade discounts are permissible, considering factors like the status of the buyer, market conditions, competition, and other commercial considerations. It held that as long as the variation in discounts is based on commercial reasons and not extra-commercial considerations, different rates of trade discounts are admissible. The Tribunal set aside the impugned order, allowing the appeal with consequential relief.