Vibgyor Chemicals Vs. Collector of Central Excise - Court Judgment

Excerpt:

.....of money. in the instant case, no such evidence has been placed on record to show that there was mutuality of interest in between two units or there was any money flow back. in these circumstances, it cannot be said that m/s.united sales agencies are the related person. once, we come to the conclusion that m/s. united sales agencies are not related person, the question of disallowance does not arise since discount needs not be uniform. it is settled position now that uniformity of discount is not a criteria but discount must be known to the buyer at the time of clearance. in the facts and circumstances, we do not find any justification in disallowing the trade discount. accordingly, we accept the appeal and in the result, the appeal is allowed.

Judgment:

1. The issue relates to trade discount. The trade discount has been disallowed by the Assistant Collector on the ground that partners of the assessees and the partners of M/s. United Sales Agencies were relatives.

2. When the matter was called none appeared on behalf of the appellants. However, in response to the notice of hearing it was submitted by them that they being a small Unit, it is not possible to afford the expenses of hearing at Delhi. It was requested by them to decide the case on merits. Accordingly, we proceed to pass this order after hearing Shri T.R. Malik, learned SDR.3. Shri Malik reiterated the findings given by the Adjudicating Authority and submitted that sales with M/s. United Sales Agencies were not at arm's length since the partners of both the units are related.

Further, he said that since discount at 10% was allowed to other buyers and United Sales Agencies being the same class of buyers, trade discount should be restricted to 10% only as against 15%.

4. We have carefully considered the submissions made by both the sides and perused the records. It is settled position now that to treat a person as a related person in terms of Section 4(e) of the Central Excises and Salt Act, there must be mutuality of interest and in other words, buyer must be associated with the business of the assessees directly or indirectly or there must be flow back of money. In the instant case, no such evidence has been placed on record to show that there was mutuality of interest in between two units or there was any money flow back. In these circumstances, it cannot be said that M/s.

United Sales Agencies are the related person. Once, we come to the conclusion that M/s. United Sales Agencies are not related person, the question of disallowance does not arise since discount needs not be uniform. It is settled position now that uniformity of discount is not a criteria but discount must be known to the buyer at the time of clearance. In the facts and circumstances, we do not find any justification in disallowing the trade discount. Accordingly, we accept the appeal and in the result, the appeal is allowed.