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TMI Blog1990 (8) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... y trade discounts at the time of the assessment of the goods to excise levy on ad valorem basis. Though a show cause notice was issued on 13-12-1973 the first respondent ultimately dropped all further proceedings by his order dated 15-6-1974. Nearly after two years another show cause notice dated 16-8-1976 was issued to the petitioner, in and by which, the petitioner was directed to show cause to the Assistant Collector of Central Excise as to why certain discounts at the rate of 20% should not be disallowed. It was proposed to demand differential duty for the past sales since 1973. The petitioner gave his explanation. However, by an order dated 3-1-1977, the trade discount was restricted to 12½% for supply of 100 dozens and more, at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure or production for delivery at the place of manufacture or production, or if a wholesale market does not exist for such article at such place, at the nearest place where such market exists, or (b) where such price is not ascertainable the price at which an article of the like kind and quality is sold or is capable of being sold by the manufacturer or producer, or his agent, at the time of the removal of the article chargeable with duty from such factory or other premises for delivery at the place of manufacture or production, or if such article is not sold or is not capable of being sold at such place, at any other place nearest thereto." 3. In the order of the first respondent dated 3-1-1977, it is observed that the petitioner allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved trade discount uniformly to all buyers. Inasmuch as Section 4 of the Act permitted the allowance of trade discount to an assessee only if the discount was uniformly and unconditionally offered to all the buyers, the allowance of 20% discount cannot be taken note of. Therefore, the discount of 20% was excluded from the assessable value of the goods. The first respondent therefore proceeded to restrict the trade discount according to his own formula and directed that the differential duty shall be paid by the petitioner. 4. The appellate authority, the second respondent, relied on the very same letters written by the buyers and came to the conclusion that it is only because the buyers wanted their orders to be split up into small lots t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority allowed the appeal and set aside the order dated 3-1-1977. 5. In the show cause notice issued by the 3rd respondent under Section 36(2) of the Act, the third respondent came to the conclusion that the maximum discount of 20% was allowed in to only to one buyer, namely M/s. T.S.R. & Co. It is also observed that the proprietor of M/s. T.S.R. & Co. is the husband of the proprietrix of the petitioner-proprietary concern. The point that is sought to be made is that M/s. T.S.R. & Co. is a related person. The third respondent in fact came to the conclusion that the graded system of discount was never intended to be passed on to buyers other than M/s. T.S.R. & Co. However, the third respondent seems to be aware of the amendment to Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the opinion that the respondents cannot take note of the same for the purpose of holding that the petitioner is not entitled to abatement of 20% discount in fixing the assessable value of the goods. In the instant case, though the third respondent has referred to this aspect of the case in their show cause notice dated 12-10-1979, the same has been ignored at the time of passing the final order. The relevant portion of the show cause notice is extracted below :- "According to Section 4 of the Central Excises and Salt Act, 1944, as it stood at the relevant time, the actual quantity discounts granted in the ordinary course of business are eligible for abatement, if such discounts are uniformly allowed to all independent wholesale buyers. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discount in a uniform manner to all the buyers. All that we could see from the price list is that 20% discount was available to those persons who lifted 200 dozens and more. If for some reason all the buyers except M/s. T.S.R. & Co., Kumbakonam, did not want to lift 200 dozens or more at a time, it cannot be said on that score that the petitioner was not giving the benefit of 20% discount uniformly to all the buyers. 8. I will now refer to some of the authorities cited on behalf of the petitioners. In Union of India, New Delhi v. Jyoti Ltd., Baroda [1978 (2) E.L.T. (J 238)], it has been held that the condition of uniform trade discount is an invention of excise authorities and it is unwarranted and a reading of Section 4 of the Excise Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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