TaxTMI 
TaxTMI 
2007 (8) TMI 20
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....t such discount was a part of their "Sales Pattern". During the course of assessment, the Department noticed certain price discrepancies. Therefore, an enquiry was made, statements of Directors were recorded and, on that basis, a show cause notice was given to the assessee claiming differential amount of duty of Rs. 40 lakhs. The assessee was also asked by the show cause notice as to why a penalty of Rs. 10 lakhs should not be imposed. 3. In these appeals, we are concerned with the period January, 1991 to April, 1992. The main case of the Department was that the appellant-assessee did not possess uniform sales pattern; that they gave different discounts to Area Distributors and dealers to whom goods were cleared directly at the factory gat....
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.... that the majority of the dealers got the benefit of 20% discount and a small minority of dealers got the benefit of trade discount of 8%. However, the fact remains that assessee gave discount at all times at 20%, even when they gave discount of 8% to small dealers because even at that time they gave commission of 12% to big dealers. If that be the case, then, the sales pattern clearly indicates that as a matter of practice, the assessee has uniformly given the benefit of trade discount at 20%. It is well settled that while adjudicating upon questions relating to sales pattern, one has to find out whether the benefit of trade discount is given uniformly On facts, we find that the assessee has given trade discount o 20% uniformly to all its ....
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....ade discount then it would constitute normal practice of the wholesale trade 7 Applying the above test we have a situation where 90% of the big dealers have got the benefit of trade discount at 20% that even in cases where 8% discount is given to sub-dealers, 12% is given to big dealers. There is one more aspect which needs to be mentioned Assessee is in the business of manufacturing service-station equipments. As indicated above, the goods are supplied to a chain of big and small dealers. Ultimately, the assessee got his business from the main dealers in 90% of the clearances. Therefore, even in cases where the assessee gave discounts of only 8% to small dealers, who constitute 10% of the total number of dealers, in order to retain the di....
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....eration for the sale. In the present case, we are concerned with the words "ordinarily" and "in the course of wholesale trade". 10. At the outset, it may be stated that in this case, we are concerned with the law as it stood before 2000. At that time, assessable value was equated to normal price which was the wholesale price at the factory gate. The word 'ordinarily' in Section 4(1)(a) indicated that if the sale pattern adopted by an assessee indicated that a large part of the total production was sold at wholesale price at the factory gate and that the assessee had given the benefit of trade discount to large number of its dealers at a particular rate, then, it would constitute "normal practice of the wholesale trade" in which event the a....