Dealer commission and service charges are not deductible from assessable value unless they qualify as trade discounts

Dealer's commission and related service charges are not deductible from assessable value unless they constitute a permissible trade discount in the normal course of wholesale trade under Section 4 of the Central Excises and Salt Act, 1944; on the facts noted, the claimed amount was linked to a single vehicle sale to territorial dealers, lacked any discount agreement, and the service-charge element was treated as market-promotion cost. The note also indicates that a wholesale price list cannot be displaced by a higher retail-based value for excise assessment merely on that basis, and the assessee's shifting stand on the nature of the charge weakened the claim.

---

---

Issues: Whether the claimed territorial dealer's commission of Rs. 5,000 per vehicle, including Rs. 800 for service charges, was deductible from the assessable value and whether the price declared in the wholesale price list could be displaced by a higher retail-based price for excise assessment.

Analysis: The deduction claimed was found not to be a trade discount allowed in the normal course of wholesale trade. The amount was claimed on the sale of a single vehicle to territorial dealers, without any agreement showing a deductible discount arrangement. The Rs. 800 component was treated as service charges connected with promoting marketability and could not be merged into dealer's commission. The remaining amount was held to be a commission for sales and services, not a permissible deduction under Section 4 of the Central Excises and Salt Act, 1944. The Tribunal also noted that the assessee had shifted its stand regarding the nature of the Rs. 800 component, which created doubt about the genuineness of the claim.

Conclusion: The claimed deduction of Rs. 5,000 per vehicle was not allowable and the Revenue's appeal succeeded.

Ratio Decidendi: Dealer's commission and service-related charges are not deductible from assessable value unless they qualify as permissible trade discounts in wholesale trade under Section 4.

---