Customs, Excise and Gold Tribunal - Mumbai
Geoffrey Manners And Co. Ltd. vs Commissioner Of Central Excise on 3 April, 2000
Equivalent citations: 2000(69)ECC653
ORDER J.H. Joglekar, Member (T)
1. When this case was called out, the appellants were not present in spite of notice. On the last two occasions also they were not present or represented. We therefore proceed to decide this issue on merits.
2. The appellants manufactured goods falling under Chapter 32 and 33 of the CETA. Various price lists were approved provisionally permitting reductions on account of discounts etc. subject to the certification by the Chartered Accountant of the actual discounts made. Two show cause notices were issued seeking to disallow gifts given by the assessees to their dealers. These gifts were comprising of goods manufactured as well as those not manufactured by them. The Assistant Collector disallowed the quantity discounts and confirmed duty totally amount to Rs. 7,98,760.90. The Collector (Appeals) upheld the order. Hence the present appeal.
3. We have heard Shri V.K. Choubey for the revenue and have seen the various contentions made in the appeal memorandum by the assessees.
4. The Bombay High Court in their judgment in the case of Queens Chemist, 1979 ELT GSA 54 on which the assessees have placed reliance, had held for admissibility of the trade discount either in cash or in kind. In later judgment the Tribunal has made one distinction between the discount given in kind of the goods manufactured by the assesces and those goods not so manufactured. The Tribunal in the case of Glaxo (I) Ltd. v. CCE held that the gifts other than the articles manufactured by the assessees were sale promotion incentives and not trade discounts and thus not deductible when determining the asessable value. This judgment was followed by the Tribunal in the case of Hindustan Cocoa Products Ltd. 1997 (93) ELT 18. To an extent the discount claimed in the present case is inadmissible.
5. As regards the quantity discount made in kind there should be no objection in terms of the Queens Chemist judgment. The learned Commissioner, however, has added a different dimension. On examination of the circulars issued by the assessees, he has concluded that the goods are actually given free on account of goods damaged during the display. He has further held that this discount is in the nature of advertisement and therefore not trade discount. The assessees say that in holding so the Commissioner has gone beyond the extent of the show cause notice and also that he has misinterpreted the circular.
6. We have seen the circulars. We have also seen the certificates given by the Chartered Accountants which show total quantity of discounts for tooth paste at 3.41% . In the display circulars issued from time to time the discount given is 4.35% to 5.88%. This in fact amounts to quantity discount and has been given uniformly to its dealers. As regards the observation of the learned Commissioner that discount for damaged goods is not allowable, we find two judgments of the Tribunal where such discount has been permitted. Although this discount was for transit, the effect would remain the same [, Assam Valley Plywood Private Limited v. CCE and Tungbhadra Industries Ltd. v. CCE.]
7. We hold that the discount given to the dealers by free allotment of the goods made by the assessees themselves was admissible in terms of Section 4. The cost of other goods such as cosmetics etc. is not entitled for such reduction. The appeal is allowed to this extent and proceedings remitted to the jurisdictional Assistant Collector only for re-determination of the duty chargeable in terms of our order above.