Actual trade discount allowed despite price-list mismatch; penalty sustained for clearance at lower assessable value without proper approval.

An actual trade discount could not be disallowed merely because the filed price list mentioned a different rate; the deduction remained allowable where the higher discount was in fact passed on to wholesale buyers, and the duty demand was deleted. However, clearing excisable goods on a lower assessable value without filing the appropriate price list or resorting to provisional assessment constituted a contravention of the rules and attracted penalty. The penalty was therefore sustained but reduced to a nominal amount.

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Issues: (i) Whether the higher trade discount of 20% actually passed on to wholesale buyers could be disallowed merely because the price list filed for those clearances mentioned only 15% discount; and (ii) whether the appellant's clearance of goods on a lower assessable value without filing an appropriate price list justified penalty and, if so, to what extent.

Issue (i): Whether the higher trade discount of 20% actually passed on to wholesale buyers could be disallowed merely because the price list filed for those clearances mentioned only 15% discount.

Analysis: The discount actually granted to the buyers could not be disallowed only on the ground that the impugned order proceeded on the filing of a price list showing a different discount. The absence of a corresponding contractual arrangement for the wholesale dealers did not, by itself, justify denying the deduction for the discount actually passed on.

Conclusion: The disallowance of the full 20% discount was not sustainable; the assessee succeeded on this issue.

Issue (ii): Whether the appellant's clearance of goods on a lower assessable value without filing an appropriate price list justified penalty and, if so, to what extent.

Analysis: Although the duty demand was set aside, the appellant had paid duty on a lower value than the approved price list without first filing the appropriate price list or resorting to provisional assessment. Such conduct amounted to removal of excisable goods in contravention of the rules and attracted penal consequences.

Conclusion: Penalty was attracted under Rule 173Q(1)(a) of the Central Excise Rules, 1944, but was reduced to Rs. 5,000.

Final Conclusion: The duty demand was deleted, while the penal liability was retained only in a reduced form, resulting in a partial allowance of the appeal in favour of the assessee.

Ratio Decidendi: An actual trade discount cannot be disallowed merely because the filed price list mentioned a different rate, but clearance of excisable goods on a lower value than the approved price without proper price-list approval or provisional assessment constitutes a contravention attracting penalty.

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