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TMI Blog1984 (3) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner claimed deductions on several accounts. They were, for example, 10 per cent trade discount, secondary packing charges, equalised freight to consumers, 4 per cent cash discount and post manufacturing expenses on account of certain items. The Assistant Collector of Central Excise by his order dated 1st September 1979 allowed only the deduction on account of trade discount as claimed by the petitioner. 3. The petitioner preferred an appeal against the said order. The appellate authority is the second respondent in this petition, namely the Collector of Central Excise having his office at Meher Building at Bombay. Subsequently the petitioner filed several other price lists wherein similar orders were passed and, therefore, the petitioner had to necessarily file seve alrappeals. We have been informed that they are twenty-nine in number. By his order dated 23rd of July 1980, the Collector of Central Excise disposed of all appeals by allowing them only to a limited extent. He allowed, for example, deduction on secondary packing claimed by the petitioner. He also allowed equalified freight charges to the extent actually incurred by the petitioner. He also allowed 4 per cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avit itself, however, nothing has been mentioned about the items on account of which deductions should be allowed under the head "post manufacturing expenses". For the purpose of the disposal of this petition, therefore, we are not referring to the contents of this affidavit. 6. Mr. Rana, the learned Advocate appearing in support of the petition, has canvassed the view that the notice issued by the sixth respondent is patently illegal and ought to be set aside. We have already mentioned above that the petitioner informed the sixth respondent that the demand notice issued by him did not take into account certain additional deductions which had been allowed by the appellate authority. If this is so, naturally, the demand notice dated 27th September 1982 will have to be set aside. Mr. Sethna, the learned Advocate appearing for the Department, has not been able to show how the sum mentioned in the said demand notice can be demanded from the petitioner, especially in view of the order passed by the appellate authority. The notice will, therefore, have to be set aside. 7. In view of the fact that certain legal propositions have now become well-settled, Mr. Rana invited us to pronounc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterpreting this provision, the Supreme Court has in its judgment dated 14th/15th November 1983 said as follows :- "Discount allowed in the trade (by whatever names such discount is described) should be allowed to be deducted from the sale price having regard to the nature of the goods if established under agreements or under terms of sale or by established practice, the allowance and the nature of the discount being known at or prior to the removal of goods, such trade discount shall not be disallowed only because they are not payable at the time of each invoice or deducted from the invoice price." From what has been mentioned above it is clear to us that if certain trade discount, by whatever name it is called, is allowed by the assessee to its customers under the terms of sale or an agreement, that amount of discount has got to be deducted from the sale price before arriving at the assessable value of the product. Of course, in addition, the allowance and the nature of the discount should be known at or prior to the removal of the goods. In other words, before the goods are actually removed for being delivered to the customer, the terms of sale must spell out that a certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half of the Department that these agreements have restrictive provisions and the prices mentioned therein were accordingly not wholesale cash price as necessary for application of the relevant provision, as it then stood. It was held by this Court that the petitioner Company had agreed to give to the dealers discount at certain rate. The business of the petitioner was also organised through dealers of different areas on the same terms and conditions. It was, therefore, held that the prices could easily be ascertained by reading the contents of the agreements made by the petitioner with each of its dealers. The so-called restrictive conditions did not make any difference in the matter of the wholesale cash price which could be ascertained in accordance with the provisions contained in clause (a) of Section 4, as it then stood. 12. This judgment of this Court was subsequently confirmed by the Supreme Court in A.K. Roy v. Voltas Limited, A.I.R. 1973 Supreme Court, 225 = 1977 E.L.T. (J 177). The Supreme Court also held that Section 4 postulated that the wholesale price should be taken on the basis of cash payment, thus eliminating the interest involved in wholesale price which gives ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s mentioned in the price list of the petitioner must be allowed irrespective of whether it was actually availed of by the customers. Mr. Sethna was allowed to argue on this point, though the appellate authority had allowed cash discount of 4 per cent to the extent it was actually given. This was so because Mr. Sethna could support the order of the appellate authority though not on the same grounds. According to Mr. Sethna, cash discount of the type claimed by the petitioner in the instant case cannot be allowed at all even to the extent at which it has been actually availed of. 15. Mr. Sethna also contended that the discount which is allowed by the petitioner is not known at or prior to the removal of the goods as mentioned in the Supreme Court judgment referred to above. We have no hesitation in rejecting this contention. We have earlier in this judgment, while analysing the nature of the discount allowed by the petitioner, said that the discount is allowed under the terms of sale. The nature of the discount and the extent of the same is also known at or prior to the removal of the goods because it is so mentioned in every price list. We do not see how one can say that the natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of secondary packing has been wrongly allowed by the appellate authority and the same must be disallowed now. It is impossible to agree with Mr. Sethna. In the first place, the Collector's order has, in so far as it relates to the secondary packing, become final. Secondly, the reviewing authority has not issued any notice in respect of the same. We do not see how the department can today contend that the order passed by the appellate authority is wrong and should now be revised as against the petitioner. We have, therefore, not allowed Mr. Sethna to argue on this point. 19. In the result, this petition partly succeeds. The notice of demand dated 27th September 1982 issued by the 6th respondent is set aside. As a result of the opinion expressed by us above, the petitioner is entitled to deduction on account of trade discount allowed by the Assistant Collector, on account of secondary packing allowed by the appellate authority and on account of 4 per cent cash discount and equalised freight which, according to us, are allowable. The petitioner shall, on or before 30th April 1984, file before the Assistant Collector of Central Excise at Thane an application claiming deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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