Trade discount valid when buyer knew the contractual terms at clearance, despite non-production of the scheme to the department.

A trade discount known to the buyer at the time of clearance cannot be disallowed merely because the discount scheme was not produced to the department. The distinction between a general Part I price list and a Part II price list reflecting contractual terms was treated as material, and where the Part II price list showed the buyer was aware of the terms at clearance, the discount remained allowable. The settled principle applied was that buyer knowledge at the time of clearance is sufficient to sustain the claim to trade discount.

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Issues: Whether the assessee's claim to quantity trade discount could be disallowed on the ground that the discount scheme was not produced to the department, when the Part II price list and contractual terms were known to the buyers at the time of clearance.

Analysis: The issue turned on whether the discount was known to the buyer at the time the goods were cleared. The distinction was drawn between Part I price list, which operates generally, and Part II price list, which reflects contractual terms between the parties. Since the Part II price list showed that the customers were aware of the relevant terms at the time of clearance, the claim could not be rejected merely because the discount was not known to the public at large. The settled position applied was that a trade discount known to the buyer at the time of clearance cannot be denied.

Conclusion: The assessee's claim to trade discount was upheld and the departmental appeal failed.

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