TMI Blog1979 (7) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany during the period from August, 1970 to May, 1974, 62.25% of the total production was sold by them and the remaining 37.75% of the production was used by the Company for the manufacture of Chemical Product known as Chlorosulphonic acid. In respect of the months of March and April, 1971, a demand has been made from the Petitioners-Company for Rs. 3122.18 Ps. and Rs. 6281.27 Ps., respectively on account of differential duties, because according to the department, the Petitioner was not entitled to deduct the trade discount of 10% which was declared by it in the case of sales to wholesale purchasers, in case they purchase more than 515 tonnes of Oleum 20% in one quarter i.e. the period of three months. There is on record a price list whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excisable article from the factory. The condition of removal of the goods not having been satisfied in the case of Oleum 20% (hereinafter referred to as 'Oleum' simpliciter) the discount could not be taken into account and the order of the Superintendent, approving the price list of the Petitioners and allowing the discount was wrong in law. An identical order also came to be passed in respect of demands for the month of April, 1971. 2. The Petitioner company filed Revision Applications before the Union Government, challenging this appellate order of the Deputy Collector. The Union Government, however, dismissed both the Revision Applications by a common order. However the order discloses that the ground on which the Revision Application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return filed in this Petition that it is the firm view of the Department and the Union Government that the Petitioners are not entitled to deduct the trade discount for the purposes of determining the value contemplated by Section 4 of the Act. 4. Mr. Diwan, appearing on behalf of the Petitioners, has contended that the concept of the quantity discount is accepted by the Government of India as would be clear from a trade notice issued by the Poona Central Excise Collectorate, in which the quantity discount has been described as the discount granted in the ordinary course of business which is based on the quantity of goods supplied. The learned Counsel has also contended that the excise duty is to be levied on the value to be determined u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntage of the provision relating to concession or advantage, must satisfactorily show that he falls within that provision. It is true that in that sense, it is for the Petitioners to satisfy the Court that the Petitioners fall within the Explanation and that the value to be determined for the purposes of excise duty has to be determined after deducting the trade discount. In order to appreciate the arguments advanced, it is necessary to refer to Section 4 of the Act as it was in force at the material time. Present Section 4 was substituted for the original section with effect from 1st October 1975. We are not concerned with Section 4 as it stands to-day. The provision with which we are concerned reads as follows:- "Sec. 4. Valuation of exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Explanation for the purposes of determining the value on which the excise duty is to be levied. One of the items permitted to be deducted is a trade discount. Now, once the trade discount is deducted from the wholesale cash price, what one gets is the wholesale cash price; at which the goods are sold to the buyer in the course of wholesale trade. In other words, the scheme of Section 4 read with the Explanation appears to be that when for the purpose of excise duty, the value of the excisable goods is to be determined, that value has to be determined on the basis of price at which goods would be ordinarily sold and this would be the price which is received by the manufacturer after making allowance for the trade discount. It is true ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cturer does not strictly become discount unless there is actually a sale of the requisite equantity. We are, however, dealing with a method of determining a deemed value prescribed by Section 4. Section 4 makes it clear that the wholesale cash price determined in the manner prescribed in clauses (a) and (b) shall be deemed to be the value of the article. As already pointed out, Section 4 refers to the normal wholesale cash price at which goods are ordinarily sold and, therefore, the fact that some part of the goods have not been sold and no trade discount was given to anybody, would not be relevant for the purposes of determining excise duty payable in respect of the goods utilised by the manufacturers for the purposes of production of othe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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