Trade discount on free sample clearances upheld where wholesale price governed excise valuation under section 4 principles.

Trade discount admissible on branded chewing tobacco sold to wholesale dealers was extended to free-of-charge clearances made for market-seeding, because the Tribunal treated the existence of a wholesale price as the basis for excise valuation under section 4 of the Central Excise Act. It also applied the principle that a trade discount governing sales through related persons could cover free sample or free distribution clearances of the same goods. On that basis, the cited precedent was found fully applicable and the impugned order was set aside.

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Issues: Whether the 20% trade discount admissible on branded chewing tobacco sold to wholesale dealers was also available for clearances made free of charge to dealers for market-seeding purposes.

Analysis: The Tribunal held that the controversy was covered by the principle that where a wholesale price is available, excise duty is chargeable on that basis under section 4 of the Central Excise Act, and that trade discount applicable to sales through related persons could also govern free sample or free distribution clearances of the same goods. The cited precedent was treated as fully applicable to the facts before the Tribunal.

Conclusion: The 20% trade discount was held admissible on goods cleared on free supply basis to dealers, and the impugned order was set aside.

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