1998 (8) TMI 232

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....ist in Part I filed by the appellant in respect of storage batteries manufactured by the appellant in the brand name `Nicco Crompton Greaves' has filed the present appeal. 2. Appellant commenced manufacture of storage batteries in the composite brand name of the appellant and M/s. Crompton Greaves Ltd. (for short CGL) and also entered into an agreement dated 22-2-1986 with CGL whereunder CGL agreed to purchase a quantity of batteries equal in number to the quantity of batteries sold by the appellant in the market and to receive trade discount of 35% as against trade discount of 17% allowed to wholesale dealers. Show cause notice dated 2-8-1988 was issued to the appellant stating that 35% trade discount allowed to CGL was not the nor....

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....son of such reduction the net price to CGL is reduced, appellant shall reimburse CGL with the differential value resulting thereby on all stocks of corresponding branded products remaining unsold with CGL or in transit and CGL shall pass on the benefit of such reduction to dealers etc. (vi) On sales by CGL to fleet owners and OEMs, appellant shall give a gross margin of 8% and 3% respectively on the net billing price which shall be equivalent to net billing price of the appellant to such customers. Along with above should be taken into consideration the circumstance that the appellant was manufacturing batteries with the brand name indicating identity of the appellant as well that of CGL. Appellant stated in the reply to the show....

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....t indicated that the appellant had around 130 wholesale dealers in the Northern and Eastern regions to whom obviously, appellant was selling around 50% of the product, less whatever was sold to institutions. This would mean that each wholesale dealer receiving 17% trade discount from the appellant was buying only an insignificant part of the production, compared to 50% of production purchased by CGL. Going by the high percentage of goods purchased by CGL, it would be legitimate for CGL to expect a substantially higher trade discount. Such a bulk buyer releases the manufacturer of the pressure of marketing effort and the like to a substantial degree. It is a legitimate trade practice for the manufacturer to give higher discount to bulk buyer....