Trade discount deduction under old Section 4 depends on actual pass-through; brokerage and commission are not deductible.

Under the old Section 4, only trade discounts actually passed on in the normal course of business were deductible from assessable value. A 5.75% agency commission on Bajaj brand fans was treated as a permissible trade discount to the sole selling agent, and an 8.5% discount on Kassels brand fans was also accepted as deductible because it was passed on through the distribution chain. By contrast, a 1% amount routed through regional distributors on Kassels brand fans was characterised as brokerage, not a trade discount, and was therefore not deductible because it was not passed on to wholesale dealers.

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Issues: (i) Whether the 5.75% agency commission on Bajaj brand fans and the 8.5% discount on Kassels brand fans were deductible from assessable value as trade discounts under the old Section 4; (ii) Whether the 1% commission on Kassels brand fans routed through the five regional distributors was deductible from assessable value.

Issue (i): Whether the 5.75% agency commission on Bajaj brand fans and the 8.5% discount on Kassels brand fans were deductible from assessable value as trade discounts under the old Section 4.

Analysis: The deduction claimed in respect of the commission on Bajaj brand fans was treated as a trade discount given to the sole selling agent and therefore as admissible. The 8.5% discount allowed to the five regional distributors on Kassels brand fans was also accepted as a trade discount passed on in the normal course of business.

Conclusion: The 5.75% agency commission on Bajaj brand fans and the 8.5% discount on Kassels brand fans were held to be deductible in favour of the assessee.

Issue (ii): Whether the 1% commission on Kassels brand fans routed through the five regional distributors was deductible from assessable value.

Analysis: The 1% commission was characterised as brokerage rather than a trade discount, and the benefit was not passed on to wholesale dealers. Under the old Section 4, only trade discounts were allowable for deduction.

Conclusion: The 1% commission on Kassels brand fans was held to be not deductible and was decided against the assessee.

Final Conclusion: The revision application succeeded only to the extent that genuine trade discounts were allowed for exclusion from assessable value, while the commission not amounting to trade discount was disallowed.

Ratio Decidendi: Under the old Section 4, only trade discounts actually passed on in the course of business are deductible from assessable value, and amounts in the nature of brokerage or commission not so passed on are not deductible.

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