TaxTMI 
TaxTMI 
1993 (9) TMI 244
X X X X Extracts X X X X
X X X X Extracts X X X X
....e said order that the appeal has been filed before the Tribunal. 2. First plea made by the learned advocate, Shri S.K. Bagaria for the appellants is that confirmation of duty to the aforesaid extent by the original authority is beyond the show cause notice dated 28-2-1985 inasmuch as the said notice merely alleged disallowing of certain deductions claimed by the appellants in their price lists. It did not seek to demand any duty. In order to appreciate this pleading, we reproduce below the relevant portion of the show cause notice :- "Please refer to your letter Ref. No.134, dated 15-2-1985 enclosing the price lists stated above. On examining of your papers pertaining to admissibility of cost of elements of deductions viz. (a) Durable and Returnable special secondary packing (b) Cash discount (c) Transportation/freight charges (d) Transit Insurance (e) Selling Agent's Commission (f) Turnover tax (g) Quality discount, it transpires that you have claimed the aforesaid deductions without observing the stipulations as contained under the provisions of section 4 of the Central Excises & Salt Act, 1944. You are, the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e on our behalf !" [emphasis supplied by ld. advocate.] The appellant's learned advocate in the course of his submissions has further given a data during the period 1979-80 to 1984-85 of total transactions through the distributors and the data of purchases made by the distributors themselves. This is as under :- Year Total transaction through the distributors. Purchases made by the distributors themselves (included in 2) Rs. Rs. 1979-80 2,05,68,387 65,25,737 1980-81 2,59,08,998 86,47,384 1981-82 2,40,99,624 77,71,176 1982-83 2,57,92,582 87,93,133 1983-84 2,96,08,263 1,08,72,386 1984-85 3,07,55,308 1,02,33,369 Learned advocate has fairly conceded that so far as the commission paid to the distributors on account of the orders secured by them on behalf of the other dealers is concerned the same is not permissible in view of the Supreme Court's judgment in the case of Coromandal Fertilisers relied upon by the lower authorities. He, however submits the proposition that if the distributors themselves have purchased the goods on a principle to principle basis from the manufacturers, the trade dis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s and circumstances of this case. 2.7 We have carefully considered the pleas advanced on both sides on this issue. We are inclinded to agree with the learned advocate for the appellants. Relevant extracts from para 5 of the Supreme Court's judgment in the case of Seshasayee Paper & Boards Ltd. are reproduced below :- "5...............There will, however, be one clarification that, as agreed to learned Attorney General, if in any case the purchaser named in the invoice is the same as the Indentor, normal trade discount given to the Indentor will be allowed as a deduction in the determination of the normal price for the levy of excise duty subject to other relevant considerations." Indentor referred to by the Apex Court in the case of Seshasayee Paper & Boards Ltd. has the same status as the distributor in the instant case. Therefore, wherever, the invoices indicate that the distributor himself has purchased the goods, the normal trade discount (although it might have been shown as a commission) which is passed on by the appellants to the dealer should be allowed to the distributor as well. However, the commission allowed to the distributors by the appellants in respect....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Hindustan Polymers v. CCE). (3) 1989 (44) E.L.T. 185 (S.C.) - (CCE v. Ponds India Ltd.). (4) 1991 (51) E.L.T. 144 (Tribunal) - (CCE v. Shankar Novelities Glass Industries). (5) 1991 (52) E.L.T. 261 (Tribunal) - (P.P.Patel & Co. v. CCE). The submissions of the appellants as regards the said secondary packing were accepted by the learned Collector (Appeals) himself in his Order-in-Appeal Nos. 391-402/Cal.-I/87 dated September 18, 1987 for the subsequent period. Alternatively he submits that the packings in question namely, hessian, paper cores and card board discs were of durable nature and were returnable by the buyers to the appellants and thus in any event the cost thereof was liable to be excluded from the assessable value. There was a clear agreement/arrangement between the appellants and its buyers that the said packing would be returnable by the buyers and in case they return the same, the appellants would accept such return and would refund the cost thereof to the buyers. The agreement/arrangement was clearly recorded in the letters of the distributors produced by the appellants before the Assistant Collector alongwith its reply dated March 18, 1985....
X X X X Extracts X X X X
X X X X Extracts X X X X
....acking such as hessain, paper cores, card board discs etc. is not a packing covered by and contemplated under section 4(4)(d)(i) of the 1944 Act. As a matter of fact, the claim of the appellants as regards the said packing being of durable nature and returnable by the buyers was accepted by the Assistant Collector himself in an earlier order dated June 13, 1980. The said order was accepted by the Department also and no further appeal was filed and/or other proceeding was initiated for setting aside the same. 2.10 On the aforesaid submissions he urges that the cost of the aforesaid secondary packing consisting of Hessain, Card Board Discs, Paper Tubes etc., as aforesaid, should be excluded from the determined value of the aforesaid goods. He relies on - (1) 1987 (27) E.L.T. 598 (SC) - (K. Radha Krishaiah v. Inspector of Central Excise) (2) 1988 (36) E.L.T. 727 (SC) - (Mahalakshmi Glass Works Pvt. Ltd. v. CCE) (3) 1989 (40) E.L.T. 139 (Tribunal) - [CCE v. EID Parry (India) Ltd.] (4) 1991 (51) E.L.T. 281 (HC) - (Wipro Products Ltd. v. U.O.I.) (5) 1992 (57) E.L.T. 173 (Tribunal) - (Maharashtra Vegetable Products Ltd. v. CCE) 2.11 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rd discs, paper tube etc. to present the Linoleum rolls from damage due to handling in transit as well as pilerage. The cost of such special packing will be to the account of our dealers and in the event of any return of such durable packing materials to you, the cost of the same will have to be reimbursed by you to our dealers." It will be seen from the above that the understanding is between the distributors and the appellants although the distributors appear to be doing it on behalf of the dealers. Nothing has been brought on record, as claimed in this letter that the dealers in any way have agreed to get the goods in the so-called special secondary packing with the clear understanding of returning the said special packing against reimbursement of the cost of such special packing. Law on the subject is very clear that the arrangement or agreement for returnability of the goods has to be between the manufacturer (assessee) and the customer. That being so, in the present case the letters from dealers on behalf of the customers/buyers cannot be treated as creating an arrangement or agreement between the appellants and the buyers. It has also not been shown by the appellants that....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... days. The said period was increased 15 days from May 4, 1982. All these circulars were duly produced by the appellants before the lower authorities. The said claim of the appellants was, however, rejected by the Asstt. Collector simply by alleging that cash discount was not availed by all the buyers. The Collector (Appeals) upheld the order passed by the Asstt. Collector by holding that cash discount is an incentive to encourage the buyers to make the payment within the stipulated time and that it was not being granted at the time of clearance of the goods and in respect of every clearance and as such it would not be allowed. It is submitted that the said reasons are no reasons at all. Cash discount was being uniformally allowed by the appellants to all its buyers in terms of the circulars issued from time to time wherein it was clearly agreed that if the payments were made within the stipulated period, cash discount would be allowed at the rate of 2%. The nature and extent of the said cash discount was known to all the buyers/dealers/distributers at or before removal of the goods from the factory. It was open to each of the buyers of the appellants goods to avail the said cash di....
X X X X Extracts X X X X
X X X X Extracts X X X X
....llants to its buyers under agreements or under terms of sale and the allowance and nature of the said discount was known at or prior to the removal of the goods. The said discount was uniformly being allowed to all the buyers making payment within the stipulated period. The deduction claimed by the appellant was only of the cash discount actually allowed by it to the buyers. It is submitted that the said discount could not be disallowed simply because it was not availed by all the customers. It is now well settled that deduction on account of the said discount is permissible even if it is not uniformly availed by all the customers. Reliance in this connection is being placed on the following decisions :- (1)  1984 (17) E.L.T. 4 (HC) - Jenson & Nicholson India Ltd. v. UOI (2)  1986 (24) E.L.T. 269 (Mad. HC) - UOI v. SSM Bros. Pvt. Ltd. (3)  1988 (34) E.L.T. 373 (CEGAT) - Bhartia Cutler Hammer Ltd. v. CCE (4)  1986 (25) E.L.T. 1032 (Bom. HC) - Music India Ltd. v. UOI (5)  1992 (59) E.L.T. 23 (Mad. HC) - Rathana Fire Works Factory v. Supdt. of Central Excise 2.16  Learned SDR reiterates the findings of the adjudicating authority to the e....