TMI Blog1992 (3) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... that trade discounts granted were not uniform and varying from 2.5% onwards and the balance of discount passed on to the distributors as overriding commission are not permissible under Section 4 of the Central Excises and Salt Act, 1944. The four show cause notices are as follows: (1) Date of show cause notice 31-12-1977, for the period from 22-8-1975 to 31- 3-1976. (2) Date of show cause notice 19-10-1977, for the period 1-4-1976 to 31-3-1977. (3) Date of the show cause notice 3-4-1978, for the period 1-4-1977 to 30-9-1977. (4) Date of the show cause notice 1-10-1977 to 28-2-1978. On receipt of the reply, the demands are confirmed by the Assistant Collector. On appeal, the Collector confirmed the order of the Asstt. Collector. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in a case where the discount declared in the price list is 7.5%, 2.5% is given to the customer and 5% differential discount is given to the stockists. This is on account of the fact that the manufactured products are distributed throughout the country through a network of stockists/distributors which are located in different regions. The commission given to these stockists was 10% to 7.5% depending upon whether the pesticides were non-superficial or superficial. If the goods were sold directly to the customers in the region and a small discount was given to the customer, a balance of the discount was passed on to the stockists in the region as his overriding commission. It was also submitted that the appellants received 87.5% or 85% of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on provided he is a distributor and a relative of the assessee [Bombay Tyre International, 1983 (14) E.L.T. 1896]. We may extract the observations made in the said judgment by the Supreme Court which are as follows: On a proper interpretation of the definition of related person in Section 4(4)(c) of Section 4, the words a relative and a distributor of the assessee do not refer to any distributor but they are limited only to a distributor which is a relative of the assessee within the meaning of the Companies Act, 1956. 7. It is not the case of the department that the distributors are related persons of the appellants within the meaning of the Companies Act. Therefore, the finding by the Collector that the distributors are related ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods. Therefore, in view of the observations of the Supreme Court in Bombay Tyre International (supra), the discount should be allowed. We may also point out that the department has not disputed the fact that the appellants were only collecting the sale price of 87.5 or 85% of the price after allowing the discounts to the stockists and the customers. The fact that a part of the discount was given to the customer and the balance to the stockists as an overriding commission, does not, in any way, affect the nature of the discount given to the stockists. The appellants have pointed out in cases where the goods were sold directly to the customers, a percentage of the discount was given to the customers and the balance out of the total disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been shown that the wholesale dealers were acting as commission agents. It is not unknown in the trade that in some cases the wholesale dealers direct certain sales to be made directly to ultimate consumers and to sub-dealers for commercial reasons. There is no direction from the Revenue that the net realisation by the appellants in all cases were as per the price list filed and approved. In this context, it is held that in respect of transactions the appellants have passed on the full discount as shown in the approved price lists. Therefore, the appellants are eligible for the full discount as approved by the departmental authorities in respect of whole range of transaction. 8. The facts of the present case are on all four with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by limitation. 11. As regards the demand for the period from 1-4-1976 to 31-3-1977, the show cause notice is barred by limitation from 1-4-1976 to 31-12-1976. As regards the demand from the 1st Jan. to 31st March, 1977, it is within the period of limitation. Similarly, the show cause notice dated 3-4-1978 for the period from 1-4-1977 to 30-9-1977 is within the period of limitation as it is within a period of six months from the closing of the accounting year. For the period from 1-10-1977 to 28-2-1978, the show cause notice dated 3-4-1978 is also within the period of limitation. 12. Though some of the show cause notices are within the period of limitation, since the demands are set aside on merits namely, that the appellants are entit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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