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K.K. Usha, J. (President)

1. This is an appeal at the instance of the assessee challenging the order passed by the Commissioner of Central Excise, Indore dated 30.10.2001. The issue raised for consideration is whether quantity discount availed by the appellant from the suppliers of raw materials is liable to be added to arrive at the assessable value of its product.

2. The appellants are engaged in the manufacture of LINEAR ALKYL BENZENE SULPHONIC ACID (LABSA) falling under Chapter Heading 3402.90 of the Schedule to the Central Excise & Tarif Act, 1985 and Spent Sulphuric Acid falling under Heading 2807. In these appeals we are concerned only with the dispute relating to assessable value of LABSA. The main inputs for manufacture of LABSA are (1) LINER ALKYL BENZENE (LAB) and (2) Sulphuric Acid. The appellants are procuring LAB from three manufacturer suppliers, namely, M/s. Indian Petrochemicals Corporation Ltd. (IPCL), M/s. Tamil Nadu Petro Products Ltd. (TPPL) and M/s. Reliance Industries Ltd. (RIL). They were procuring Sulphuric Acid from M/s. Rama Phosphates, Indore and M/s. Khaitan Fertilizers Ltd. LABSA manufactured by the appellant are sold to M/s. Hindustan Lever Ltd. (HLL), M/s. Vikram Detergent Pvt. Ltd. (VDPL), M/s. Guljag Chemicals Pvt. Ltd. and M/s. Indira Poly Fab Pvt. Ltd., M/s. Varuna Detergents and M/s. Oriclean Pvt. Ltd. M/s. HLL is a bulk buyer of LAB from IPCL. They were therefore being granted bulk discount by IPCL. On the recommendation of HLL the appellants were granted such discount by IPCL.

9. In Brindavan Beverages Ltd. v. CCE, Banglore, 2001 (135) ELT 766, the tribunal held that any additional consideration paid by the supplier of raw materials cannot be added to the assessable value of the final product.

10. Learned Departmental Representative reiterated the reasoning given by the Commissioner in support of his finding.

11. We find merit in the contention raised by the appellant, Even though IPCL granted quantity discount to the appellant in respect of purchase of LAB it cannot be contended that it is an additional consideration flowing from HLL, buyer of final product LABSA. The provisions of Rule 5 can be applied only when it is shown that the price is not the sole consideration. If it is so established, then the amount of money value of any additional consideration flowing directly or indirectly from the buyer to the assessee has to be added for arriving at the assessable value. In the present case, there are no materials placed before us by the Revenue, which could justify taking recourse to Rule 5. The appellant's price to HLL and other buyers were the same. It would therefore show that the quantity discount obtained from IPCL had no effect on the price agreed between the parties. The Revenue has not been able to show that appellant had depressed the prices of their goods sold to HLL in view of the quantity discount obtained from IPCL for purchase of the raw material LAB. The ratio of the decisions of the Tribunal relied on by the appellant would support its contention.