TaxTMI 
TaxTMI 
2000 (7) TMI 275
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....ssible deduction as the dealers appointed by the appellants were only selling agents and not independent dealers who had bought the yarn for further sale. 2. We have heard ld. Consultant Shri R.K. Krishnan for the appellants and Shri P.K. Jain, ld. JDR for the respondent Commissioner. 3. Ld. Consultant submitted that the appellants who were engaged in the manufacture of cotton yarn falling under Chapter 52 of the Schedule to the Central Excise Tariff Act, 1985 were effecting sale of their product through their sales depots as well as from their premises and through appointed dealers. Since the price of the cotton yarn fluctuated frequently even in the course of a single day, the sale price were basically determined by the demand....
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....l Excise Rules after executing the necessary bond. When the assessments were being finalised the Department took a stand that the commission paid to the dealers was not tenable as trade discount at the time of removal of the goods. The appellants' contention that the commission paid to the dealers through credit notes was essentially in the nature of trade discount and hence a permissible deduction under Section 4 of the Central Excise Act was not accepted by the adjudicating authority who held that the dealers were actually agents of the appellant and therefore the commission paid to them were not eligible for deduction as trade discount. The Commissioner (Appeals) had confirmed the above view of the Assistant Commissioner. 4.  Ld. C....
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....ce and the nature of the discount was known to the parties at the time prior to removal of the goods. Such trade discount shall not be disallowed only because they were not payable at the time of each invoice or deducted from the invoice price. Ld. Consultant has contended that it would be clear from the case law cited that a trade discount by whatever name called, shall be allowed if it was known prior to the removal of the goods. In the instant case, the dealer had full prior knowledge in terms of the agreement that they were entitled to the deductions from their net realisation. As such , the test laid down by the Apex Court in Bombay Tyres International case was fully satisfied. In view of the legal position as laid down by the Apex Cou....
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....realised by them. In this connection, he also referred to the Apex Court judgment in M/s. Coromandel Fertilizers India Ltd. v. U.O.I. [1984 (17) E.L.T. 607] in which it has been held that every kind of trade allowance will not qualify for deduction in the assessment of excise duty. The commission paid to an agent for services rendered by him in the matter of sale of the product on behalf of the appellant on the basis of an agreement cannot be considered to be in the nature of a trade discount. Where the commission is in the nature of a remuneration for the services rendered by the agents, it cannot be considered to be a trade discount within the meaning of explanation of Section 4. In the facts of the present case, the commission paid by th....