Holding

The Court held that notional interest on interest‑free advances must be reloaded into the price, but the trade discount to the wholesale buyer is a permissible deduction, and the longer limitation period under Section 11‑A applies.

Summary

Metal Box India Ltd., a manufacturer of metal containers, sold its goods to Ponds (I) Ltd., a wholesale buyer, under agreements that allowed interest‑free advances and trade discounts. The tax authorities treated the contract price as the net price after discounts and omitted the value of the advances, leading to a show‑cause notice and demand for excise duty. The disputes before the Supreme Court concerned (i) whether the notional interest on the advances should be added to the price under Section 4(1)(a) of the Central Excises and Salt Act, (ii) whether the trade discount could be deducted under Section 4(4)(d)(ii), and (iii) whether the revenue could invoke the five‑year limitation period under the proviso to Section 11‑A. The Court held that the advances constituted additional consideration and must be reloaded into the price, but the trade discount given to a wholesale buyer is a permissible deduction and should not be added to the assessable value. It also affirmed that the longer limitation period was applicable because of the alleged suppression of material facts. Consequently, the Supreme Court allowed the appeals in part, upholding the revenue’s claim on interest but setting aside the Tribunal’s decision on the trade discount.

Issues considered

Whether interest‑free advances received from a wholesale buyer must be added to the price for determining the normal price under Section 4(1)(a) of the Central Excises and Salt Act, 1944.
Whether a trade discount granted to a wholesale buyer is deductible under the proviso to Section 4(4)(d)(ii) of the same Act.
Whether the revenue may invoke the five‑year limitation period under the proviso to Section 11‑A of the Act despite the assessee’s claim of a shorter limitation.

Legislation cited

Central Excise Rules, 1944s. Rule 10 (sub‑rule (1))
Central Excises and Salt Act, 1944s. 11-A, s. 35-L, s. 4(1)(a), s. 4(4)(d)(ii)
Supreme Court Rules, 1966s. Order XX-A, s. Order XX-B

Subjects

excise dutynormal pricenotional interesttrade discountlimitation periodSection 4Section 11-Awholesale buyerprice valuation

Judgment

A METAL BOX INDIA LTD.
v.
THE COLLECTOR OF CENTRAL EXCISE, MADRAS

JANUARY 10, 1995
B
[B.P. JEEVAN REDDY AND S.B. MAJMUDAR, JJ.)
......
Central Excises and Salt Act, 1944-Ss.4(l)(a), 4(4)(d)(ii), JJA-Ex-
~t-
cisable good~Valuation offor charging excise dutyRecove1y of duties short
levied--Limitation f 01~Assessee-manufacturer rec;eiving interest free advances
c of large amounts from its wholesale buye~Revenue reloading purchase price
by notional interest on advances made to manufacturer and rejecting
assessee's claim for deductions of rebates and discounts given to wholesale
buye~Held, notional rate of interest on advances given by buyer to manufac-
turer should be reloaded in the price so as to reflect correct price of goods
D sold by manufacturer--For a wholesale buyer concession by way of trade
discount cannot be said to be uncalled for or a special treatment contrary to
~
trade practice and the amount has to be deducted for computing nonnal price
of goo~Manufacturer while submitting price lists suppressed details of in-
terest free advances made to it by buyer which resulted in short levy of duty
Revenue justified in invoking period of limitation under proviso to s.11-A.
E
The appellant-company carried on the business of manufacturing
and marketing metal containers which were classified under Tariff Item
No. 46 of the Schedule to the Central Excises & Salt Act, 1944, and were
liable to excise duty ad volorem. The goods were manufactured as \'.er
F individual customers' requirement. One of such customer (the buyer com- ?·
pany) entered into an agreement with the appellant whereunder the latter
. was to be paid as advance certain amount in consideration of maintaining
a steady and regular supply of containers to the former allowing it certain
discounts from the gross price of the containers. The appellant submitted
to the Assisstent Collector of Central Excise, a price list in which the
G contract price of the goods sold to the buyer-company was shown as net
price after deducting the discounts and the rebates. The Assistant Collec-
tor of Central Excise issued a notice datd 27.6.1984 to the appellant to ·>..
show cause as to why the gross price indicated in the agreement should
/
not be treated as the true price and the additional consideration by WflY of
H interest accruing on the advances made by the buyer-company should not
136
METAL BOX v. COLLECTOR OF C. EXCISE 137

be added thereto in order to arrive at the assessable value. Accordingly, a A
demand-cum-show cause notice was issued to the appellant where under
A'.
the appellant was to pay basic excise duty and special excise duty for the
period July 1, 1980 to November 30, 1984. After hearing the appellant, the
Assistant Collector, Central Excise, confirmed the demand of duty and the
special excise duty. On appeal, the Collector of Central Excise allowed the
claim of the assessee relating to loading of ad hoc interest on the advance
B
made by the buyer-company, but did not allow its claim regarding rebates
-+. and discounts given to the buyer-company. The assessee as well as the
revenue filed appeals before the Customs, Excise and Gold (Control)
Appellate Tribunal, which allowed the appeal of the revenue and dismissed
that of the assessee, confirming the entire order of the Assistant Collector. c
Aggrieved, the assessee filed the appeals.

It was contended for the appellant that the Tribunal had patently
erred in restoring the loading of purchase price by the ad hoc interest on
advance made by the buyer-company to the asessee and in rejecting the
assessee's claim regarding rebates and discounts given to the buyer-com-
D
Jr"
pany for being deducted from the gross price. It was also contended that
only a shorter period of limitation was available to the revenue and the
revenue authorities were not right in invoking the period of five years
under the proviso to Section llA of the Act.
E
Allowing the appeals in part, this Court

HELD : 1. The Tribunal was perfectly justified in holding that
charging a separate price for the goods supplied to the buyer-company
could not stand justified under the proviso to s.4(1) (a) of the Central F
Excise and Salt Act, 1944. It has rightly confirmed the decision of the
Assistant Collector, Central Excise to the efftct that notional rate of
interest on the advances given by the buyer-company to the appellant
should be reloaded in the price so as to reflect the correct price of the
goods sold by tbe appellant. If the buyer-company had not advanced
interest free amounts to the appellant, it would have been required to G
borrow these amounts for purchasing raw materials and other accessories
~
from outside on large amounts of interest which would have got reflected
in the purchase price to be charged from the buyers as it would be a part
of cost of production which was to be passed on to the customers. Section
4(1) (a) of the Act envisages that normal price would be the price which H
138 SUPREME COURT REPORTS [1995] 1 S.C.R.

A must be the sole consideration for the sale of goods and there could not
be other consideration except the price for the sale of goods. If the price ..,..
in a particular transaction is not the sole consideration flowing directly
\
or indirectly from the buyer to the assessee-manufacturer, either in cash ~
or any other form, the additional consideration quantified in terms of
money value is to be added to the price declared by the assessee for
B determining the normal price of goods. [143-C, 142-G-H, 143-B]

2. The Tribunal, however, erred in taking the view that as trade
discount was uniformly not given to all its customers by the assessee, it
.-r-
was not a permissible deduction and it had to be 'reloaded in the price of
c the excisable goods. The buyer company, which lifted 90% of the goods
manufactured by the appellant in its factory at Madras, was almost a
wholesale buyer of the goods of the assessee during the relevant periods
of assessment. Such buyer would certainly form a separate and distinct
class. In view of s.4(1) (a) of the Act, concession by way of trade discount
given by the appellant to the said wholesale buyer connot be said to be in
D any way uncalled for or a special treatment contrary to trade practice. In
't·
view of s. 4(4)(d)(ii), that amount cannot be included in the value of the
excisable goods and has to be deducted for computing the normal price of
the goods concerned. It is not in dispute that the buyer company has not
refunded such discount on any amount. Therefore, it satisfies the require-
E ment of clause (ii) of Section 4(4)(d) of the Act. [146-F, 145-C, 146-B]
(Jujarat State Fertilizers Co. Ltd. v. Unlon of India and Ors., (1980) 6
Exsise Law Times 397, approved.

F
3. The Tribunal was right in holding that a longer period of limita-
tion as envisaged by the proviso to s.llA of the Central Excises and Salt
.,
Act, 1944 was available to the revenue. It has been found on record that in
the price lists submitied by the appellant details of interest free advances
of huge amounts made by the buyer-company were suppressed. The
revenue has, therefore, held that the duty have been short levied on account
G of wilful suppression of relevant facts by the assessee. This finding is well '""'
sustained on record and calls for no interference. [142-D]
-:..
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 215-16
of 1989. ~

'

H From the Judgment and Order dated 11.10.88 of the Central Cus-
METAL BOX v. COLLECTOR OF C.EXCISE (MAJMUDAR, J.) 139

toms Excise and Gold (Control) Appellate Tribunal, New Delhi in A.No. A
¥. E/1656/86-A & 1688/87-A with E/COD/557/87-A & E/Misc./234 of 1987-A.

Soli J. Sorabjee, D.A. Dave and AK. Sinha for the Appellant.

M. Gaurishankar Murthy, P. Narasimhan and V.K. Verma for the
Respondent. B
The Judgment of the Court was delivered by

MAJMUDAR, J. These two appeals are filed by the assessee, Metal
Box India Limited, under Section 35-L of the Central Excise & Salt Act,
1944 read with Order XX-A & B of the Supreme Court Rules, 1966, c
challenging the order of the Customs, Excise & Gold (Control) Appellate
Tribunal, New Delhi, in two appeals filed by the appellant-assessee on the
one hand and the Collector of Central Excise, Madras, on the other. The
appellant is aggrieved by the aforesaid decision of the Tribunal by which
it was held that the Department was entitled to reload the price of the D
concerned goods manufactured by the assessee and sold to M/s Ponds (I)
Limited by ignoring the deduction claimed by the assessee by way of trade
discount and also by adding the interest accruing on advances made by the
said buyer, Ponds (I) Limited to the assessee during the relevant years of
assessment. A few relevant facts may be stated at the outset. The appellant E
is a Public Limited Company carrying on the business of maufacturing and
marketing metal containers which were classified under tariff item No. 46
of the erstwhile schedule to the Central Excise & Salt Act, 1944 and liable
to excise duty ad valorem. The Company for the purpose of its aforesaid
business has factories in several parts of the country including Madras. The
F
present appeals relate to the Madras factory.

That the appellant is manufacturing goods as per the individual
customers' requirements and supplies to the customers against negotiated .
prices which are printed in the contract. It is the case of the appellant that
one such customer is Ponds (I) Limited, an independent corporate body, G
which is neither related to the appellant nor has it any interest either
directly or indirectly in the business of th_e appellant. The said Ponds (I)
Limited which is engaged in the business, inter alia, of marketing cosmetic
products being in need of steady supply of containers for its aforesaid
business approached the appellant by way of an arrangement under which H
140 SUPREME COURT REPORTS [1995) 1 S.C.R.

A the appellant was to manufacture containers as per the specification sup-
plied by the Ponds (I) Limited and in consideration of the appellant's "-
maintaining a steady ·and regular supply of the containers, the Ponds (I)
Limited agreed to pay as advance certain amounts with a view to seeing
that ready stocks of raw materials and components were ma~e available by
B the appellant to meet the demands of containers as put forward by Ponds
(I) Limited. An agreement was entered into between the parties about
certain discounts to be given to Ponds (I) Limited which were to be
deducted from the gross price which reflected various factors that went
into the determination of a negotiated contract price.

C The appellant submitted the price list in Part-II in respect of its sales
to Ponds (I) Limited in which the contract price of the goods sold was
shown as net price after deducting discounts and rebates as appearing in
schedule II. .. Earlier these price lists were approved by the appropriate
Officer. However, a show cause notice was iij>sued by the Assistant Collec-
D tor of Cent~al Excise, Madras, on 27th June, 1984, calling upon the appel-
lant to show cause :-

(1) Why the gross price indicated in the aforesaid agreements should not
be treated as the true price for the purpose of arriving at the assessable
value and why the ad9itional consideration by way of interest accruing on
E the advances made by Ponds (I) Liihited should not be added to arrive at
the assessable value for the period of July 1, 1983 onwards?

(2) Why the gross prices should not be arrived at after adding the interest
accruing on the advances and the assessable value arrived at on this basis ')"-
F for the period from July 1, 1983?

(3) Why the consequential duty should not be demanded from the appel-
lant under the proviso to sub-rule (1) of Rule 10 of the Central Excise
Rules, 1944, and under the proviso to Section llA of the Central Excise
& Salt Act.

The appellant replied to said show cause notice. Another notice was ~
issued on 18th January, 1985 in the nature of a demand-cum-show cause
notice whereby the appellant was called upon to show cause as to why basic
excise duty in the sum of Rs. 23,50,031.40 paise and special excise duty in
H the sum of Rs. 1,17,500.68 paise for the the period July 1, 1980 to Novemb~r
METAL BOX v. COLLECTOR OF C.EXCISE [MAJMUDAR, J.] 141

30, 1984 should not be demanded from the appellant. The appellant replied A
to the said notice on January 18, 1985.
-¥

After hearing the appellant, the Assistant Collector, Central Excise,
Madras, by his decision dated 27th May, 1985, held against the appellant
on all counts. The Assistant Collector held that the appellant suppressed
material facts in order to evade payment of duty and consequently held B
that the extended period of limitation was available to the Department. The
..... Assistant Collector also added the rebates and discounts mentioned in the
agreements between Ponds (I) Limited to the contract price between the
appellant and Ponds (I) Limited to arrive at the assessable value. The
Assistant Collector also added ad hoc interest on the advances received by c
the appellant and added the same to the gross price for arriving at the
assessable value. Accordingly, the demand of duty and special excise duty
was confirmed.

The appellant preferred an appeal to the Collector of Central Excise
D
j, . (Appeals), Madras. The Collector of Central Excise (Appeals), Madras
after hearing, partly allowed the appeal by accepting the contention of the
appellant relating to loading of ad hoc interest on the advances made by
Ponds (I) Ltd. but rejected the appellant's contention relating to the
inclusion of rebates and discounts given to Poinds (I) Limited. The appel-
lant, thereafter, preferred appeals to the Tribunal, as stated above. The E
Department also filed cross appeal against that portion of the order of the
Collector of Central Excise (Appeals), Madras, whereby he had accepted
the appellant's contention relating to the loading of ad hoc interest.

" The Tribunal heard both the sides, allowed the Department's appeal
and dismissed two appeals of the appellant and consequently the entire
F

order of the Assistant Collector was confirmed. That is how the appellant
is before this Court in the present appeals.

We have hear.cl learned counsel for the parties in support of their
respective cases. Mr. Sorabjee assisted by Mr. D.A. Dave, learned counsel,
G
raised the following contentions in support of the appeals.

(1) That the proceedings consequent to the show cause notice inasmuch
as they sought to invoke the period of five years under the proviso to
Section llA of the Act were misconceived and only shorter period of H
l .'

'"~-·
'-,
I~<:'\ ·~
\
. f
142 .' SUPREME COURT REPORTS-~ ~"· (1995) 1 S.C.R.

A limitation w~s ~·aVail~ble·. to th~ Oepartment to raise such a de~and.

(2) In any case even on merits the Tribunal had patently erred in law in
allowing the Department's appeal and in restoring the loading of purchase
price by the ad hoc interest cin advances made by Ponds (I) Limited to the
asscssee . . -···
B '
(3) The Tribunal equally erred in law in rejecting the appellant's contention
regarcfuig "rebates and ..discounts. given .to Ponds (I) Limited for being
deducted from the gross price. We shall deal with these contentions
seriatim. '
'
c .

So far as contention No.1 is concerned, it is obvious that the Depart-
ment invoked proviso to Section llA on the ground that while 'submitting
the price list, the appellant had suppressed material facts. It has been found
on record that in the price lists submitted by the appellant details of
· advances made by Ponds (I) Limited, the wholesale buyer of appellant's
D goods and ihat too interest free advances of huge amounts were all sup-
pressed from the Department and, therefore, it has to be held that the duty
have been short levied on account of wilful suppression of relevant facts
by the assessee. This finding is well sustained on record and calls for no . ~
interference. We, therefore, concur with the conclusion reached by the
E Tn"bunal that longer period of limitation is available to the Department.
We reject contention No.l. . .

So far as co~tention No. 2 is concerned, it is u;,e that .Ponds (I)
Limited was. almost a wholesale buyer of fue appellant's goods, namely, '
metal containers manufactured by it as it was lifting 90 per cent of the total ·
F production of the appellant. For. that p~rpose huge amounts were being ·
advanced free of interest by Ponds (I) Limited to the appellant. When
Ponds (I) Limited was given 50 per cent discount froill normal price then .
the material aspect that Ponds (I) Limited had advanced large amounts
free of interest had necessarily entered into consideration between ihe
G parties. Therefore, special treatment was given by the assessee to Ponds
(I) Limited. It has to be appreciated that if Ponds (I) Limited had not given
these amounts, the appellants would have been required to borrow these
amounts for purChasing raw materials and other accessories from outside
like banks etc. and would have beeri required to pay large amounts of r'
H interest whiCh ~turally would have got reflected in the purchase price to
METAL BOX v. COLLECTOR OF C.EXCISE [MATMUDAR, J.] 143

be charged from the buyers as it would be a part of wst of production A
which was to be passed on to the customers of the appellant's goods. It has
been laid down by Section 4(l)(a) that normal price would be price which
must be the sole consideration for the sale of goods and there could not
be other consideration except the price for the sale of the goods and oply
under such a situation sub-section (1) (a) would come into play. If the price B
in a particular transaction is not the sole consideration flowing directly or
indirectly from the buyer to the assessee-manufacturer, either in cash or
any other form, the additional consideration quantified in terms of money
value is to be added to the price declared by the assessee for determining
the normal price of the goods. In these circumstances the Tribunal was
c
perfectly justified in upsetting the decision of the Collector and confirming
the decision of the Assistant Collector when the latter held that notional
rate of interest on the advances given by the wholesale buyer, Ponds (I)
Limited, to the appellant should be reloaded in the price so a,s to reflect
the correct price of the goods sold by the appellant. The Tribunal was right
when it considered the fact that after agreement entered l;>y the appellant D
with Ponds (I) Limited, the appellant got large amounts of Rs. 75 lakhs in
1980, Rs. 100 lakhs in 1981 and Rs. 200 lakhs in 1982 free of interest and
these advances were maintained at the same level on the first working day
of every month as specifically provided for in the agreement column 9 as
the special agreement between the parties and it had a direct impact on E
the pegging down of purchase price which ultimately was charged by the
appellant from the wholesale buyer, Ponds (I) Limited. The said price
charged by the appellant from Ponds (I) Limited could not be said to be
normal price of containers on account of extraneous reason, namely, that
a favoured treatment was given to Ponds (I) Limited which had given such p
large amounts to the appellant free of interest for purchasing raw materials
and accessories for manufacturing the C\mtainers which were ultimately
sold by the appellant to the Ponds (I) Limited. The Tribunal has also noted
the reasoning of the Assistant Collector on this aspect to the effect that
the extent of such deduction in the price can reasonably be attributed to
the interest amount payable on the advance which had Mis Metal Box India G
Limited obtained from any other source with interest bearing loan, would
have been loading on the cost of manufactll{er and sale price of the metal
containers naturally increasing the concessional price charged from Ponds
(I) Limited.
H
144 SUPREME COURT REPORTS [1995) 1 S.C.K

A On the facts on record, therefore, it must be held that the Tribunal
was perfectly justified it1 taking the view that charging a separate price for
'-
the metal containers supplied to M/s Ponds (I) Limited could not stand
justified under Section 4(1)(a) proviso and, therefore, to that separate .
price charged from the Ponds (I) Limited, the extent of benefit obtained
by the assessee on interest free loan was required to be reloaded by hiking
B the price charged from Mis Ponds (I) Limited to that extent. Contention
No. 2 also, therefore, fails and is rejected.
).-

This takes us to the last contention. On this contention the appellant
is on a better footing. The Ponds (I) Limited was almost a wholesale buyer
c of the metal containers of the assessee during the relevant periods of
assessment. Out of the total metal containers manufactured by the assessee
in its factory at Madras, 90 per cent were lifted by Ponds (I) Limited. In
such a situation the question arises whether the proviso to Section 4(1)(a)
can be made applicable· after taking out the consideration of interest free
D advance Jllade by Ponds (I) Limited to the appellant. As we have rejected
·~
contention No. 2 and allowed reloading of purchase price by the notional
value of interest on the advances made by Ponds (I) Limited to the
assessee, that aspect now has to be kept out of picture. In that light we
may visualise the sitpation prevailing at the relevant time. It becomes clear ·
E that the assessee came forward to give special rebate in the purchase price
to an almost wholesale buyer of its goods and when it had to meet the
demand for metal containers as placed in advance by such a bulk buyer. It
is not in dispute that 90 per cent of metal containers which were manufac-
tured by the appellant were supplied to this wholesale buyer, Ponds (I)
Limited. Now the question whether Ponds (I) Limited was also a financier
F becomes irrelevant as that aspect is taken care of by our decision on point
>--
No. 2 and the price charged by the appellant from Ponds (I) Limited has
got reloaded by the amount of notional interest which the appellant had to
pay to Ponds (I) Limited for utilising its money for purchasing raw
materials etc. Therefore, the net picture which emerges is that here was a
G wholesale buyer claiming discount because it avoided the botheration of
the appellant by way of advertising cost for marketing its products as 90
per cent of its product were guaranteed to be lifted by Ponds (I) Limited. ·"'-
For such a buyer if a concession by way of trade discount is given, may be
to the extent of 50 per cent though in fact now it will not be to the extent
H of 50 per cent but much less as we have permitted reloading of the contract ,
METALBOXv. COLLECTOROFC.EXCISE[MAJMUDAR,J.] 145

price between the parties by the notional value of interest on advances A
received by the assessee from Ponds (I) Limited during the relevant time,
such a trade discount cannot be said to be in any way uncalled for or a
special treatment contrary to trade practice. Therefore, once the conten-
tion No.2 is rejected then for deciding contemion No.3 the proviso to
Section 4(1)(a) would directly get attracted. Learned counsel for the B
respondent contended that for attracting the said proviso it should be
shown that in accordance with normal practice of wholesale trade different
prices are charged from different classes of buyers. That a buyer who
purchases 90 per cent of the goods cannot be said to form a different class
of buyers. It is difficult to agree with this contention. The buyer who
purchases small quantities of goods may stand in different class as com- c
pared to a buyer who purchases 90 per cent of manufactured goods. He
would certainly form a separate and distinct class. In this connection, we
may usefully refer to the term "value" as mentioned in Section 4, sub-section
4(d). It is subject to deductions envisaged by Section 4(4)(d)(ii) which
include amongst others the trade discount (such discount not being refun- D
dable on any account whatsoever) allowed in accordance with the normal
practice of the wholesale trade at the time of removal in respect of such
goods sold or contracted for sale. It cannot be gainsaid that the appellant
was manufacturing the goods which were offered for sale in wholesale to
Ponds (I) Limited, a buyer also in wholesale and it lifted 90 per cent of E
the manufactured goods. For such a buyer if the manufacturer offers trade
discount that amount cannot be included in the value of the excisable goods
and has to be deducted for computing the normal price of the goods
concerned.

Learned counsel for the Department vehemently contended that F
such a discount to be admissible has firstly to be uniformally made available
to all customers like concessional sales of goods on festivals like Diwali or
Christmas etc. It may be that such general concessions are given on such
occasions to all customers but it cannot be said that if a special trade
discount is given to such an esteemed customer who is a buyer of 90 per G
cent of goods, it would amount to trade practice which would not be a
JI"· normal trade practice but would be in any way an impermissible trade
practice. In fact such type of concessions are usually given by manufac-
turers whose goods are lifted by whole-buyers whose availability avoids lot
of marketing and advertising costs for the manufacturer and also ensures H
146 . SUPREME COURT REPORTS [1995] 1 S.C.R .

A a guaranteed quantity of sales year after year. In order to keep such a
wholesale nonopolistic buyer attached to it, if under such circumstances by
way of business expediency, the manufacturer offers him a special trade
·discount, it cannot he said that it is not in accordance with normal' practice
of wholesale trade: ·rt is not in dispute that Ponds (I) Limited has not
·.; B refunded such dise'ount o~ any account. Therefore, it satisfies the require-
'ment of clause (ii) ot'Section 4(4)(d) of the Act. Learned counsel for. the
appeJfant ·in this connection invited our attention to the decision of the
· Gujarat High Court in Gujarat State Fertilizers Co. Limited v: Union of India
· & Ors.,· (i980) 6 Excise Law Times 397. The Division Bench· of the Gujarat
~ · High Court· consisting 9f P.D.' Desai and G.T. Nanavati, JJ., interpreting
-'C .
the scope of Section 4 of the Act laid do"Wn that Section 4 of the Central
Exitse' Act does not iri terms enact the trade ·discount in order to qualify
· .for dei:luction thereunder should be on a uniform basis· to all wholesale
plircnasers at the factory gate. Any such view would require the addition
.. ofwould"uniforin' before the 'trade discount' occurring in Section 4 which
D ''is not 'evidently permissible. Nor it would be advisable to read the require-
" inerit of uniformity' ·even by implication: Everi if trade discount is not
uniformly given or is given at different rates to different purchasers, it
cannot by itself disqualify if from being excluded for arriving at the asses-
sable 'value so-long as the lack of uniformity is not founded on any extra
· E · cominercial' considerations. To· ignore the dednction of trade discount
j would amonnt to adding a·non-~xistent fraction to the manufacturing profit

' . which Will artificially illtlate the net assessable value' for the levy of excise
''duty which is not legally permissible having regard to the basic concept of
excise levy. We concur with the aforesaid view on the scope and ambit of
. F trade discount envisaged for Section 4. In view of the aforesaid discussion, ~-

. it rii.ust be held that the Tribunal was in' error in taking the view that as
· ' trade diseount was uniformly not given to 'ai1 its customers by the assessee,
it was 'not a permissible deduCtion and it had to be reloaded in the price
; ~f the excisable goods. We, therefore, accept the last, contention. In the
: result these appeals are partly allowed, the order of the Tribunal will stand
G confirmed insofar as period of limitation applicable herein and reloading
of the purchase price by the notional value of interest on advances made
by wholesale buyer Ponds (I) Limited to the assessee is concerned and to .......I
that extent Assistant Collector;s order will stand untouched. However, to
the ' exteiit' oi' the 'disallowance 'of the trade discount offered to the
·H·
METALBOXv. COLLECTOROFC.EXCISE[MATMUDAR,J.] 147

wholesale buyers Ponds (I) Limited by the assessee, the decision of the A
Tribunal is set aside and accordingly the ori~inal order passed by the
Assistant Collector to that effect will also stand set aside. In the facts and
circumstances of the case, there will be no order as to costs.

The liability of the appellant for the demanded duty in the show
cause notice will have to be re-calculated in the light of the present B
judgment.

R.P. Appeals allowed .

..