Customs, Excise and Gold Tribunal - Mumbai
Bombay Chemicals Ltd. vs Cce on 21 July, 1998
Equivalent citations: 1998(79)ECR617(TRI.-MUMBAI)
ORDER K. Sankararaman, Member (T)
1. This appeal is directed against or-der-in-appeal No. GSM-131/90B-III dated 16.1.1990 passed by the Collector of Central Excise (Appeals), Bombay allowing the appeal filed by the Department and setting aside the order dated 27.5.1988 passed by the Assistant Collector, Thane, Division-II whereby the latter had upheld the contention of M/s. Bombay Chemicals Ltd., (the present appellant) that the stockists and wholesalers are separate class of buyers and that the former were entitled to trade discount of 15%. By allowing the Department's appeal and setting aside the aforesaid order of the Assistant Collector, the Collector (Appeals) upheld that the assessee (appellant herein) was entitled to deduction of only 10% as trade discount in respect of their sales to the stockists, that quantum of discount being what was allowed by them to the wholesalers when they made the supplies directly to them.
2. Arguing the case of the appellant, Shri Sandeep Narain, learned advocate submitted that appellant was having distributors covering different regions and on their sales made to such distributors, they were given discount of 20%. The distributors were selling the goods to stockists in their region. Such stockists, in turn, had a number of wholesalers within their territory. Sometimes, sales were made by the appellant directly to the stockists as well as to the wholesalers. In the case of such direct sales to stockists, the discount allowed was 15% but 5% was paid to the distributors. Likewise, when sales were made directly to the wholesalers, the discount offered was 10% but in that case, the stockists were given 5%. The department has taken the stand that the payments made to the stockists were in the nature of agency commission paid to the stockists who were performing such a function on behalf of the appellant. Learned Counsel contended that this was not a correct position taken by the Department since the stockists were not performing any such agency function. In support of the claim that they were entitled to the deduction of 15% in respect of their direct sales effected to the stockists, learned Counsel relied upon the decision of the Tribunal in Sandoz limited .
3. Resisting the arguments advanced in support of the appeal, Shri K. Srivastava, learned Departmental Representative stated that the stockists were acting on behalf of the appellant and as such, the Collector (Appeals) had correctly held that the payment made by the appellant to the stockists was agency commission according to the judgment of the Supreme Court in Coromandal Fertilizers . He pleaded that the appeal be dismissed.
4. We have taken note of the rival submissions. We have perused the record and the judgements cited at the bar. The narration of the facts in the appeal memorandum as also the discussion in the impugned order-in-appeal bear out the claim of the appellant that the stockists were not performing the function of the agents of the appellant. Accordingly, the discount paid to them by the appellant in respect of the sales effected by them directly to the wholesalers situated in the territory of such stockists may not be considered as an agency commission paid to them for services rendered by them to the appellant as agent. Accordingly, the judgment of the Supreme Court in Coromandal Fertilizers does not apply to the present case. We also find that the Tribunal had held in the following cases that the higher discount paid to the wholesalers should be admissible and not limited to lower discount paid by the manufacturer to sub-dealers. In such cases where supplies were made directly by the manufacturer to sub-dealers to whom the lower discount was given and the differential amount of discount was paid to the wholesalers, the action of the Departmental Officers in denying the higher discount was reversed. The decisions were in the following cases:
(i) Electrical Products Corporation v. CCE .
(ii) CCE v. Stallion Shox Ltd. .
(iii) CCE v. Talbros Automotive Components reported in 1997 (90) ELT 219 (Tribunal) : 1997 (68) ECR 801 (T).
5. In line with the stand taken by the Tribunal in the aforesaid cases, we hold that the appellant was entitled to deduction of 15% discount in respect of sales made to the stockists and the Collector (Appeals) was in error in restricting the discount to 10% only which was the quantum of discount granted by them to wholesalers when supplies were made directly by the appellant to such wholesalers. The impugned order-in-appeal is set aside and the appeal allowed.