1997 (3) TMI 317 - AT - Central Excise

Appellate tribunal affirms non-uniform trade discount allowance under Central Excises and Salt Act

The appellate tribunal upheld the lower appellate authority's decision to allow the non-uniform trade discount claimed by the respondents under Section 4 ... Valuation Issues:1. Admissibility of non-uniform trade discount under Section 4 of the Central Excises and Salt Act, 1944.2. Conditions for granting trade discount and its admissibility.Analysis:Issue 1: Admissibility of non-uniform trade discount under Section 4 of the Central Excises and Salt Act, 1944:The case involved a dispute regarding the admissibility of a non-uniform trade discount claimed by a manufacturer of electric wires and cables. The original authority disallowed the discount, citing lack of uniformity. However, on appeal, the respondents succeeded, and the lower appellate authority allowed the discount based on the Supreme Court's decision in Bombay Tyres International. The appellate tribunal concurred with the lower authority's decision, emphasizing that uniformity of discount is not a legal requirement. The tribunal held that discounts are permissible if established by practice, contract, and identifiable at the time and place of delivery of goods. The tribunal upheld the lower authority's decision, dismissing the Revenue's appeal and directing the Revenue to follow the lower authority's directions.Issue 2: Conditions for granting trade discount and its admissibility:The Revenue contended that non-uniformity of discount and failure to fulfill conditions for granting the discount could render it inadmissible. The tribunal rejected the Revenue's argument on non-uniformity, stating that it does not automatically make the discount inadmissible. However, the tribunal agreed that if a discount is subject to conditions and those conditions are not met, the discount would be inadmissible. In this case, the Revenue did not demonstrate that the discount was subject to unfulfilled conditions. The tribunal noted that the lower appellate authority had already ruled that discount should be allowed subject to certain conditions, emphasizing that the grant must be established by practice, contract, and identifiable at the time and place of delivery of goods. Consequently, the tribunal found no merit in the Revenue's appeal and upheld the lower authority's decision, dismissing the appeal and instructing the Revenue to comply with the lower authority's directives.In conclusion, the appellate tribunal affirmed the lower appellate authority's decision to allow the non-uniform trade discount claimed by the respondents, emphasizing that discounts are permissible if supported by practice, contract, and identifiable at the time and place of delivery. The tribunal rejected the Revenue's arguments on non-uniformity and unfulfilled conditions for granting discounts, directing the Revenue to adhere to the lower authority's ruling.