1996 (5) TMI 172

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.... by M/s. Crompton Greaves Ltd. (CG). The appellants and M/s. Crompton Greaves Ltd. were related persons and the assessments were made on the basis of the prices charged by M/s. CG from their wholesale buyers. The Asstt. Collector had disallowed the distribution discount on the basis that it was not allowed for the purpose of the first wholesale but for the purpose of further sale to retailers by the distribution oriented dealers. The ld. Collector (Appeals), Central Excise, Madras, had rejected the appeal of the appellants  on the ground that it was not a permissible deduction under Section 4 of the Central Excises & Salt Act and that although the appellants call this deduction as a discount, it is not a discount but actually is a comp....

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....ow it was a compensation and how it was for the sales promotion. 7. We have carefully considered the matter. The appellants have explained the nature of the discount in their reply dated 26-3-1985 to the Asstt. Collector of Central Excise in response to the show cause notice. Distribution Discount 6.1. The stockists/dealers to whom CG effects sales are broadly classified into : (a) Distribution oriented dealers (DOD) who buy in bulk, transport the goods to the retailers and effects sales at the retailers' shops; and, (b) Dealers (simpliciter) who buy the products in bulk and effect sales to the retailers only from their own shops and do not transport the goods to the retailers and supply the same at their premises. ....

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....iven or that there was any flow back. There is nothing on record also to establish that these distributors were discharging any function on behalf of the manufacturers like advertisements, publicity, aftersale services, etc. There were two classes of distributors and differential discount was given, which is permissible under the law. The ld. Collector (Appeals), Central Excise had disallowed the discount on the ground that it was meant to compensate the expenses of DODs incurred in connection with the sale promotion. To our mind, subsequent sale to the customers is not a sales promotion. No other ground has been given by the ld. Collector (Appeals) to reject the contention of the appellant. 11. In the case of Metal Box India Ltd. v....