9911796707
TMI Blog1995 (2) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... le value of the goods manufactured and cleared by the appellants. 2. The appellants are engaged in the manufacture of food products i.e. Mango Complan and Glucon-D. They filed a price list claiming deduction of the cost of one shaker (mug) worth Rs. 4.20 and cost of one spoon of Rs. 0.75 as free gift to their customers. According to the Department the abatement of price on account of cost of shaker (mug) and spoon was not admissible under Section 4 of the Central Excises & Salt Act, 1944. Show cause notice was issued raising the demand of Rs. 14,288.10 and same was confirmed by the Assistant Collector disallowing the deduction of cost of shaker and cost of spoon supplied by the appellants as free gift. The appellants have become unsuccessf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xports [1981 (8) E.L.T. 856]. He also referred to the decisions in the case of Collector of Central Excise v. Weikfield Products Company (India) Limited [1993 (63) E.L.T. 756] and Goodlass Narolac Paints Limited v. Union of India, [1993 (65) E.L.T. 186 (Bom.)] in support of his contention that trade discount/quantity discount is to be deducted out of the assessable value. He said that even if the free supply of items were held to be as part of the sales promotion, still the discount in respect of the same is permissible as the bonus articles are akin to discount in kind and the appellants had borne the cost of such free articles. He referred to the decision in the case of Bombay Latex & Dipersions Pvt. Ltd. v. Collector of Central Excise, B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facturing Department (supra) and the decision referred to by the learned DR in the case of Uptron India Ltd. is not applicable as it was held in different context. 6. We have carefully considered the submissions made by both sides and perused the record including citations. The trade discount is deductible item under Section 4(4)d(ii) in determining the assessable value. The term `trade discount' is not defined in the Central Excises & Salt Act, 1944. According to the Webester's third New International Dictionary expression trade discount means `a percentage deduction from the list price of goods allowed by a manufacturer or wholesaler to customers engaged in trade'. Similarly the term `trade discount' has been defined in Corpus Juris Seco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided they are not given at the discretion of manufacturer, but the buyer of goods becomes entitled to them on fulfilling of any condition at the time of removal of the goods. Bombay High Court in the case of Queens Chemist Manufacturing Department (supra) held that value of the gifts cannot be treated as trade discount when buyer does not have right to have a particular gift. Therefore, where buyer has right to a particular gift it can be treated as trade discount. It was held in the case of Burlington's Export (supra) that if the customer gets 6 pieces of an article for the price of 5 pieces the price paid for 5 pieces will be assessable value for 6 pieces and there is no justification for adding the price of the free piece in arriving at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be considered as trade discount. Further the Assistant Collector is right in observing that the intention behind giving a free gift to the unknown and unrelated retail buyer and linking of the same with the sale cannot be anything but promotion of the sale. He observed that bought out item namely plastic mug supplied with the Complan bears the name of the product as `Complan Mango Shake' and since the free gift carries above advertisement of the excisable goods on it and therefore the said gift is also meant for publicity of the same in addition to promotion of the sale. Expe- nses incurred on promotion of sale and advertisement are not deductible from the assessable value, as already settled by the Hon'ble Supreme Court in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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