NATIONAL PEROXIDE LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellants are engaged in the manufacture of Hydrogen Peroxide 50% W/W falling under Chapter Heading 2847 of Central Excise Tariff Act, 1985. During the period relevant, for the purposes of present appeal i.e. April 96 to September 97, the appellants were clearing the said product to different buyers by giving them different amounts of discounts. They were served with seven periodical show cause notices raising demand of duty of Rs. 85,36,435/ - on the ground that such different trade discounts to different buyers were not permissible inasmuch as they were not uniform and, as such, the same cannot be deducted from the assessable value. The appellants contended that the different amounts of discounts were being given to their customers, who were different categories/classes of buyers and such discounts were permissible in terms of the settled position of the law as declared by the Tribunal in various decisions.

(2.) THE Assistant Commissioner adjudicated the said show cause notices and observed that trade discounts need not be uniform and may vary from dealer to dealer, place to place and from time to time depending upon the commercial exigencies. Section 4 of Central Excise Act, only requires that such trade discounts should not be refundable, the same are allowed at the time of removal of the goods from the factory and the same are in accordance with the trade practice of the wholesale trade in respect of such goods. Accordingly, he held that if the above conditions are satisfied, and if trade discounts are actually allowed, they cannot be denied. Accordingly, he dropped the show cause notice.

(3.) BEING aggrieved with the above order of the Assistant Commissioner, Revenue filed an appeal before the Commissioner (Appeals). While disposing of the appeals, the appellate authority observed as under : - I have carefully gone through the case records and the respondents submissions. Hon. Supreme Court in case of M/s. Metal Box India Ltd. v. CCE, Madras has held that "Valuation class of buyers - A bulk buyer and a small buyer fall in two different classes of buyers - Section 4(l)(a), proviso clause (i), of C. Ex. Salt Act, 1944". Hon. Tribunal in case of M/s. Indian Oxygen Ltd. v. CCE, Calcutta II has held that "Valuation (Central Excise) Resel -lers/dealers are separate class of buyers from industrial consumers" - Hon. Tribunal in case of M/s. Cora Mal Hari Ram Ltd., v. CCE, Delhi has held that "Under proviso (i) of Section 4(l)(a) what is "the normal practice of wholesale trade" has to be determined on trade considerations. As regards the sale "by the assessee at different prices to different classes of buyers", it appears reasonable to assume that it is for the assessee to classify his buyers according to his commercial considerations, of course, the classification has to be rational and identifiable, based purely on commercial considerations. It could not be arbitrary or capricious. If the classification of his buyers by the assessee is within the basic scheme for determination of the assessable value under Section 4 of the Act, then no objection could reasonably be raised by the Central Excise department for determining the assessable value on the basis of "different prices to different class of buyers" (nor being related persons). The expression "different class of buyers" occurring in the proviso (i) to Section 4(l)(a) of the Act read with the definition of "wholesale dealer" under Section 2(K) and of wholesale trade under Section 4(4)(e) appear to cover not only a trader, manufacturer, broker, commission agent, contractor, stockist, industrial consumer, Government and local authority, but also different dealers and buyers, who deal in and buy for resale, or purchase their requirements in wholesale. There appears no doubt that all the wholesale dealers and all the buyers in the whole of the country could not be taken to form a single class of buyers.