1995 (12) TMI 181 - AT - Central Excise

Summary

Issues Involved:
1. Whether cash discount is allowable.
2. Whether deduction of 3% trade discount granted to wholesalers in regard to goods directly sold to sub-dealers is allowable.
3. Whether deduction for cost of wooden crates is allowable.

Summary:

POINT NO. I:
The issue was whether the cash discount mentioned in the price lists should be allowed irrespective of whether customers actually availed it. The Tribunal followed the decisions of the Bombay and Madras High Courts, which held that cash discount must be allowed irrespective of its actual availing by customers. The Tribunal concluded that the cash discount is liable to be deducted from the price list price.

POINT NO. II:
The issue was whether the 3% trade discount given to wholesalers for sales directly made to sub-dealers by the manufacturer is allowable. The Tribunal noted that the relationship between the manufacturer and wholesalers/sub-dealers was on a principal-to-principal basis. The Tribunal referred to the Supreme Court's decision in Moped India Ltd. and other relevant cases, concluding that the 3% discount was indeed a trade discount and not a commission. Therefore, the 3% discount paid to the wholesaler was admissible for deduction.

POINT NO. III:
The issue was whether the cost of wooden crates used for packing goods sold to distant wholesalers should be included in the assessable value. The Tribunal referred to the Supreme Court's decision in Madras Rubber Factory Ltd., which emphasized that the packing necessary for putting the excisable article in the condition in which it is generally sold in the wholesale market at the factory gate should be included in the value. The Tribunal found that since a significant portion of sales involved packing in wooden cases, such packing was "necessary" to make the goods marketable in the wholesale trade at the factory gate. Therefore, the cost of secondary packing in wooden cases had to be included in the assessable value.

Conclusion:
The Tribunal dismissed both the appeals and confirmed the order passed by the Collector, allowing the cash discount and 3% trade discount but including the cost of wooden crates in the assessable value.