TMI Blog1978 (2) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect from February 28, 1964. By a notification of exemption dated February 28, 1965, the levy was withdrawn with effect from February 28, 1965. In this appeal we are concerned with the Notices of Demand for payment of excise duty made by the Department for the period October 1, 1964 to February 26, 1965. ****** 3. Before the learned trial Judge two contentions were urged on behalf of the Petitioners. The first contention was that having regard to the provisions of Section 4 of the Act, the only basis for determination of the excise duty payable by the Petitioners Company was the price charged by the Petitioners to the distributors with the abatement of trade discount which was admittedly continuously being given by the Agreement of Distribution. According to the Petitioners, the price charged by the distributors to the wholesale purchasers, with whom they dealt, was entirely irrelevant in assessing the excise duty payable by the Petitioner. Secondly, it was contended before him that during the relevant period, i.e., October 1, 1964 to February 26, 1965, final and complete assessments of excise duty were made and the amounts assessed to be due were recovered and paid. It was ur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there shall be levied and collected in such manner duties of excise on all excisable goods other than salt, which are produced or manufactured in India.................. at the rates set forth in the First Schedule to the said Act. "Excisable goods" under Section 2(d) of the Act are defined as goods specified in the First Schedule as being subject to duty of excise. It is not disputed that for the relevant period with which we are concerned, viz., October 1, 1964 to February 28, 1965, `Footwear' was included as an excisable item being Item No. 36 in the First Schedule to the said Act. Section 4 of the Act provides how the value has to be determined for the purposes of duty. Section 4 reads as under :- "Determination of value for the purpose of duty - Where under this Act, any articles is chargeable with duty at a rate dependent on the value of the article, such value be deemed to be - (a) the wholesome cash price for which an article of the like kind and quality is sold or is capable of being sold at the time of the removal of the articles chargeable with duty from the factory or any other premises of manufacture or production for delivery at the places of manufacture or pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the distributors shall be reimbursed with the difference in prices only on supplies made 28 days preceding the day the reduction takes effect. 5. The distributors shall be entitled to remuneration as per Schedule below : Trade discount Onward Freight Allowance Octroi Special Rebate Bonus 8(Eight) per cent 1.50 per cent Nil 1.50% (One Half) Nil ***** 8. The supply of goods shall be made to the distributors against their orders on outright sale basis and the Railway Receipt/P.W.D./C. Note along with the Sight Draft shall be sent through the bank for collection. All payments are to be made by demand drafts drawn in favour of the company crossed "A/c Payee" and not in the name of employees. Company accepts no liability for payments made to employees by cash or any other mode than the one mentioned above." The rest of the terms are not material for the purpose of determination of the matter in controversy between the parties. 6. The short question that has to be determined in the present case is whether 11 per cent reduction comprising of 8 per cent trade disco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales would not be the "wholesale cash price" for levying excise under Section 4 of the Act. The ordinary meaning of the expression "trade discount" is a percentage deduction from the regular list or catalogue price of goods. It is not even the case of the department that the specimen of the agreement that has been annexed to the petition as Exhibit `K' is a manipulated document with a view to reduce liability for levy of the excise nor is it even contended that the distributors are selected of consideration other than business consideration. No element of favour or special consideration has been imputed to the petitioners. If the distributors have to effect an outright purchase in accordance with their obligations under the agreement, then naturally the prices paid by them for bulk purchase to be effected by them under the agreement will represent the wholesale cash price. The simple question that has to be considered in he present case is whether the deduction of 11 per cent is permissible to a distributor or any part thereof has to be disallowed for determining the value for the purpose of levy of excise duty. It is an erroneous interpretation of the agreement to infer that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re and terms of the agreement between the petitioners and the distributors, the learned Judge was right in taking the view that the entire amount of 11% was a trade discount and had to be deducted while determining the value of the goods for levy of excise duty in view of the provisions of Explanation to Section 4 of the Act. 7. Reference was made to a decision of the Supreme Court in the case of A.K Roy v. Voltas Ltd. - 1977 E.L.T. (J 177) = A.I R. 1973 Supreme Court 225. This decision of the Supreme Court rather than supporting the contention of the Excise authorities goes to support the view that has been taken by the learned trial Judge. The question that arose for determination before the Supreme Court was of a different nature and we are not concerned with the facts thereof. The principle that has been laid down in that case is that if there is a special or favoured buyer to whom a specially low price is charged because of extra-commercial consideration, i.e., because he is relative of the manufacturer, the price charged for those sales would not be `wholesale cash price'. Once wholesale dealings at arms length are established, the determination of the wholesale cash price ..... X X X X Extracts X X X X X X X X Extracts X X X X
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