1998 (6) TMI 203 - AT - Central Excise

Summary

Issues:
Appeal against order-in-appeal confirming duty payment based on approved price lists for two factories - Admissibility of trade discount for 8 detergent cakes claimed as free gift - Interpretation of trade discount in kind - Reliance on precedents regarding deduction of gift costs - Proper manner of filing price lists for excisable goods.

Analysis:
The case involved an appeal against an order-in-appeal confirming duty payment based on approved price lists for two factories. The main issue was the admissibility of a trade discount for 8 detergent cakes claimed as a free gift. The appellant, engaged in manufacturing washing powder and detergent cakes, filed price lists for excisable goods, including detergent cakes as free gifts. The Proper Officer approved the price lists but disallowed deduction for the value of the detergent cakes, directing duty payment based on the approved prices. The central question was whether the value of the detergent cakes claimed as a free gift or trade discount was admissible for deduction from the wholesale price declared. The appellant argued that the cakes were part of the margin for wholesalers and should be treated as trade discount. The Respondent contended that trade discount by way of goods could only be allowed if the goods were of the same kind declared. Both sides relied on various decisions to support their arguments.

The Tribunal referred to precedents to analyze the concept of trade discount in kind. In the case of Glaxo India Ltd., it was held that gifts given to consumers for sale promotion purposes were not deductible as trade discounts. Similarly, in Hindustan Cocoa Products, the cost of a free gift to consumers was not considered a trade discount. The Tribunal also referred to Queen Chemist Manufacturing Department, Kalpi Stores, and Bombay Latex & Dispersions Pvt. Ltd. to establish principles regarding the deduction of gift costs in relation to trade discounts. The Tribunal emphasized that the nature of the gift or delivery must truly benefit the wholesaler to be considered a trade discount admissible for deduction.

The Tribunal concluded that the appellant did not file price lists in the proper manner, failing to declare separate prices for detergent powder and detergent cakes. However, based on the analysis of the data in the price lists, it was determined that the value of the gift articles should be considered part of the margin for the wholesaler, qualifying as a trade discount. The decision was influenced by the principle laid down in Bombay Latex & Dispersions Pvt. Ltd. The impugned order was set aside, and the appeals were allowed, highlighting the importance of correctly declaring prices for excisable goods to ensure the admissibility of trade discounts.