1996 (12) TMI 144 - AT - Central Excise

Summary

Issues:
1. Dispute over trade and cash discounts claimed by the respondent.
2. Interpretation of discounts given to wholesalers and sub-dealers.
3. Comparison of commission paid to selling agents vs. discounts diverted to wholesalers.
4. Application of previous Tribunal decisions on trade discounts.
5. Assessment of assessable value based on discounts given.

Analysis:
1. The case involved a dispute regarding the trade and cash discounts claimed by the respondent, a manufacturer of motor vehicle parts covered by Chapter Heading 87.08 of CET. The respondent filed price lists claiming deductions of 30% trade discount and 4% cash discount, which were challenged by show cause notices issued by the authorities.

2. The trade pattern of the respondent revealed that a significant portion of goods were sold to wholesalers at a 30% discount, who then sold to sub-dealers at a 22.5% discount. The remaining 30% of goods were dispatched directly to sub-dealers, with bills issued by the manufacturer allowing a 22.5% discount. The dispute centered around whether the 7.5% paid to wholesalers for these direct sales constituted a commission or part of the trade discount.

3. The Assistant Collector viewed the 7.5% payment to wholesalers as a commission, while the Collector (Appeals) considered it part of the trade discount. The legal arguments presented referred to a previous case involving commission paid to consignee distributors, distinguishing it from the current scenario of discounts diverted to wholesalers.

4. The respondent's counsel cited Tribunal decisions in similar cases, such as Electrical Products Corporation and Stallion Shox Ltd., where discounts diverted to wholesalers were treated as allowable trade discounts. These decisions emphasized that the total discount available at the time of sale should be considered, and deviations for commercial reasons did not alter the nature of the discount.

5. Applying the principles from the cited cases, the Tribunal held that the 7.5% discount passed on to wholesalers for the direct sales to sub-dealers should be deducted from the wholesale price to determine the assessable value. The Tribunal found no grounds to interfere with this conclusion and dismissed the appeal accordingly.