TMI Blog2007 (8) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... t places. They manufacture compressors, pumps, service-station equipments etc. M/s. Elgi Equipments Ltd. (assessees) claimed trade discounts varying from 10% to 45% on different products. They declared that such discount was a part of their "Sales Pattern". During the course of assessment, the Department noticed certain price discrepancies. Therefore, an enquiry was made, statements of Directors were recorded and, on that basis, a show cause notice was given to the assessee claiming differential amount of duty of Rs. 40 lakhs. The assessee was also asked by the show cause notice as to why a penalty of Rs. 10 lakhs should not be imposed. 3. In these appeals, we are concerned with the period January, 1991 to April, 1992. The main case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e total number of dealers who got the trade discount of 20%. There is no adjudication by the original authority on this point. Therefore, we have to proceed on the basis on the figures given by the assessee, namely that the majority of the dealers got the benefit of 20% discount and a small minority of dealers got the benefit of trade discount of 8%. However, the fact remains that assessee gave discount at all times at 20%, even when they gave discount of 8% to small dealers because even at that time they gave commission of 12% to big dealers. If that be the case, then, the sales pattern clearly indicates that as a matter of practice, the assessee has uniformly given the benefit of trade discount at 20%. It is well settled that while adjudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t while others are not, then, it cannot be the normal practice of the wholesale trade in such goods After the illustration, the test follows, namely, that if majority of persons engaged in the wholesale trade are given trade discount then it would constitute normal practice of the wholesale trade 7 Applying the above test we have a situation where 90% of the big dealers have got the benefit of trade discount at 20% that even in cases where 8% discount is given to sub-dealers, 12% is given to big dealers. There is one more aspect which needs to be mentioned Assessee is in the business of manufacturing service-station equipments. As indicated above, the goods are supplied to a chain of big and small dealers. Ultimately, the assessee got h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale. In the present case, we are concerned with the words "ordinarily" and "in the course of wholesale trade". 10. At the outset, it may be stated that in this case, we are concerned with the law as it stood before 2000. At that time, assessable value was equated to normal price which was the wholesale price at the factory gate. The word 'ordinarily' in Section 4(1)(a) indicated that if the sale pattern adopted by an assessee indicated that a large part of the total production was sold at whole ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld have been sold by the assessee in course of wholesale trade to a buyer at arm's length. It is not the case of the Department that the said Rule was not applicable. It is not the case of the Department that wholesale price at the factory gate was not ascertainable. In the circumstances, we hold that the assessee was entitled to the abatement. 13. The last question which arises for determination is concerning the goods which were under stock transfer. In the present case, a large percentage of the goods was sold in the wholesale at the factory gate. However, a small percentage has been cleared through the depot. The Department has taken the depot price as the basis of the assessable value on the ground that the assessee is selling the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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