Genuine trade discount may be excluded from excisable value when invoices and records show no disguised commission or flow-back.

A special 15% discount granted to an authorised dealer was treated as a genuine contractual trade discount rather than a disguised commission for excise valuation purposes. The discount arose from the dealer's higher stock lifting, was separately reflected through invoices and credit notes, and there was no evidence of flow-back or any device to recharacterise commission as discount. On those facts, the discount was held deductible from assessable value under the Central Excise Act, 1944, and could not be added merely because it was commercially higher than the normal discount.

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Issues: Whether the additional 15% discount granted to the authorised dealer was a genuine trade discount deductible from assessable value under Section 4 of the Central Excise Act, 1944, or a disguised commission liable to be added to value.

Analysis: The discount was found to arise from the contractual arrangement and the dealer's lifting of higher stocks than other dealers. The invoices and credit notes showed distinct treatment of trade discount and commission, and there was no evidence of flow-back or any device to recharacterise commission as discount. The Tribunal also followed its earlier decision on identical facts and the settled principle that, where a discount is actually allowed and reflected in the invoices, it cannot be loaded into assessable value merely because it is commercially higher than the normal discount.

Conclusion: The 15% special discount was a permissible trade discount and not commission. It was rightly excluded from assessable value, and the appeal succeeded.

Ratio Decidendi: A genuine contractual trade discount, actually allowed and reflected in the invoices, cannot be added to assessable value in the absence of proof that it is a disguised commission or that there is any flow-back.

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