TMI Blog1998 (6) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant, engaged in the manufacture of washing powder and detergent cakes, filed price lists with reference to the two factories showing excisable goods as washing powder, tariff classification as 3402.90, the wholesale prices for different States, the unit of sale as 1 bag (50 plastic pouch of 1 kg. each plus 1 kg. detergent cake (125 gm. X 8 = 1 kg.), the trade discount as 8 detergent cakes of 1 kg. under Chapter Heading 3481.20 as free gift and claiming the declared value as the value for approval. The Proper Officer approved the price lists after disallowing deduction of the value of 8 detergent cakes. He also directed duty to be paid on this basis. The short question is whether the value of 8 detergent cakes (1 kg.) claimed as free gif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antity. Both sides placed reliance on certain decisions. 2. Shri M. Ali, JDR placed reliance on two decisions of the Tribunal, namely, Glaxo India Ltd. - 1995 (76) E.L.T. 451 (Tribunal) and Hindustan Cocoa Products - 1997 (93) E.L.T. 180 (Tribunal) = 1996 (17) RLT 846 (Tribunal). In Glaxo India Ltd. consumers purchasing packets of mango complan and glucon D manufactured by the appellant were being given gift of plastic shaker and spoon. Appellant filed a price list claiming deduction of one shaker and spoon as free gift to customers. The statutory authorities disallowed deduction and the Tribunal upheld this order. The two Member Bench which decided the case held that trade discount may be in cash or in kind and that the quantity discount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 846 (Tribunal). We applied the ratio of the above decision in a case where manufacturer of Bournvita supplied plastic mug free of cost to the consumer and held that the cost of the gift cannot be treated as trade discount admissible for deduction. 3. Queen Chemist Manufacturing Department - 1979 (4) E.L.T. (J 454) (Bom.) the manufacturer of pharmaceutical product known as Queen Balm was giving a cash discount to distributors and giving gifts in kind to dealers. The sole distributor was also giving quantity discount to dealers. The question was whether deduction of these items were admissible. It was held that quantity discount i.e. delivery of more articles for the price of less number of articles would be admissible but the cost of gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, on this issue, the appeal deserves to be allowed. 6. Going by the facts and the decision of the three Member Bench of the Tribunal in Bombay Latex Dispersions Pvt. Ltd. the real question is whether the gift or delivery was really in the nature of trade discount for the benefit of the wholesaler. The decision does not make any distinction between a case where the gift articles are bought-out items or items different from the excisable goods and the case where the gift articles or the additional articles supplied are of the same kind as excisable goods. The ultimate question is what exactly is the price which the wholesale dealer is required to pay to the manufacturer. If 13 units of excisable goods are supplied to a wholesal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on between a case where a manufacturer supplies 13 units for the price of 12 units and the case where a manufacturer supplies 12 units and another article of some value for the price of 12 units of excisable goods. Both are instances where the wholesaler parts with an article of some value in favour of the manufacturer, without receiving the price thereof. We are supported in this view by the decision of the three Member Bench of the Tribunal in Bombay Latex Dispersions Ltd. The decision of the two Member Bench in Glaxo (I) Ltd. could rest entirely on the principle that the gift in that case was given not to the wholesaler dealer but to the ultimate consumer. The additional reason cited, namely, that the article gifted was quite different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ept that the appellant intended to meet the price of gift articles from his own pocket. The cost of the articles must necessarily be in the price declared in the price list. The benefit of the gift articles and the value thereof would go to the wholesaler and the wholesaler is not required to pass on the benefit of the gift to the retailer or to the ultimate consumer and therefore, so far as the manufacturer is concerned, the value of the gift article would the margin or part of the margin of the wholesaler. This is precisely what is meant by trade discount. In our view, the same is admissible following the principle laid down in Bombay Latex Dispersions Pvt. Ltd. 8. The impugned order is set aside and appeals are allowed. - - TaxTMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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