Trade discount allowed to dealers was held deductible for excise valuation when known before removal and passed through invoices.

Distribution discount allowed to distribution-oriented dealers was treated as a permissible trade discount for excise valuation because it was known before removal, passed on through invoices, and there was no evidence of any flow back or extra-commercial consideration. The record also showed no indication that the distributors performed advertising, publicity, after-sale service, or other sales-promotion functions on behalf of the manufacturer. Differential discounts to different classes of buyers were therefore acceptable, and the deduction was upheld as part of the terms of sale and established practice.

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Issues: Whether the distribution discount allowed to distribution-oriented dealers was a permissible deduction while determining assessable value under the excise law.

Analysis: The discount was known before removal of the goods and was actually passed on through invoices. The record did not show any flow back, nor that the distributors were performing functions such as advertising, publicity, after-sale service, or other sales-promotion activities on behalf of the manufacturer. Differential discounts could be granted to different classes of buyers, and there was nothing to indicate any extra-commercial consideration. The deduction was treated as one allowed by terms of sale and established practice, falling within the scope of trade discount.

Conclusion: The distribution discount was a permissible deduction and could not be disallowed for valuation purposes.

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