Cash discount known before removal remains deductible from sale price and cannot be denied merely because not all buyers use it.

Cash discount disclosed in the price list and known to the purchaser at or before removal of the goods is an admissible deduction from the sale price for duty purposes. The principle applied is that a trade discount, including cash discount, cannot be disallowed merely because every purchaser does not avail of it, so long as the discount is available depending on the timing of payment. On that basis, the show cause notices seeking duty by rejecting the cash discount were held unsustainable and were quashed.

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Issues: Whether the show cause notices demanding duty by disallowing cash discount were sustainable.

Analysis: The challenged notices sought to recover duty after rejecting cash discount claimed on sales. The governing principle applied was that a trade discount, including cash discount, is deductible from the sale price if it is known to the purchaser at or before removal of the goods. Since the discount was disclosed in the price list and was available depending on the timing of payment, it remained an admissible deduction even if not availed of by every purchaser.

Conclusion: The show cause notices were liable to be quashed, and the issue was decided in favour of the petitioners.

Ratio Decidendi: A trade discount known to the purchaser at or before removal of the goods is deductible from the sale price, and cash discount cannot be disallowed merely because all purchasers do not avail it.

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