TMI Blog1989 (9) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of the case are that appellants M/s. Weikfield Products Company (India) Private Limited are manufacturers of Prepared or Preserved Foods which fall under the Tariff Item 1(B) of the Central Excise Tariff. During the relevant period i.e. from 1-10-1974 to 30-8-1975 they had sold their goods through two broad channels viz. directly to the Canteen Stores Department (hereinafter called CSD) and to the Weikfield Central Marketing Organisation (hereinafter called the CMO), allowing 20% and 30% discount to CSD and CMO respectively. According to the appellants higher discount was allowed to CMO because they were sole selling agents for civil sales in India and they have to incur cost of freight for transporting the goods from Pune to outside ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ership firm having separate legal entity. CMO cannot be considered as a related person under Section 4(4)(c) of the Act even if the partners and the Directors in these two concerns are relatives in view of the ruling given by this Tribunal in the case of G. D. Industrial Engineers v. Collr. of Cus. of Central Excise, Chandigarh, reported in 1983 (14) E.L.T. 1994 (CEGAT) = 1984 (3) ETR 393- in the case of Meteor Satellite Ltd., Kathwada, Ahmedabad and Telstar Electronics, Ahmedabad v. Collr. of Central Excise, Baroda, reported in 1985 (22) E.L.T. 271 (Tri.) = 1984 (4) ETR 359. Further, he brought to our notice where the Collector (Appeals) in his Order No. 510/PN-47/85 dated 14-5-1985 has taken the same view in the appellant s case for the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port of his contention, he cited a decision of Voltas case reported in 1977 (1) E.L.T. Q 177). 4. Shri Krishnamurthy, learned S.D.R. appearing for the respondent justified the action of the authorities below in rejecting the refund claim of the appellants on the ground that the same was not at arm s length as the partners of the CMO were closely related with that of the appellants and hence, the excess discount cannot be allowed as the CMO was a favoured buyer. 5. We have considered the submissions and perused the records. The issues to be decided in this case are (i) whether CMO is a related person or favoured buyer, and (ii) whether the discount allowed by the appellant s firm to CMO is permissible, if so to what extent ? 6. Both th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted in 1978 (2) E.L.T. (J 224), it is clear that under old Section 4 as it stood prior to 1-10-1975, there had to be one price for the manufactured article computed in the manner contemplated either by clause (a) or clause (b) of Section 4 of the Act. Trade discount generally comes out of post-manufacturing profits. Therefore, where a manufacturer has allowed various rates of trade discounts it is the maximum rate of discount which will be allowable abatement in such cases. Following this principle and in view of the fact that in the instant case, the goods were not sold at an unduly low price to CMO and in view of the submission of the counsel that excess discount allowed to the CMO, the CMO was bound to pass to their wholesale dealers a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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