Judgment:
1. In their various price lists the appellants had claimed that 3% cash discount would be given by them to the buyers. On certain grounds, the price lists were provisionally approved. At the time of final approval, it was shown to the Assistant Collector that cash discount given was at two rates namely 3% and 5%. The Assistant Collector did not allow the higher rate of discount but finalised at 3%. He however, went on record to the effect that evidence has been produced by the Assessee to show that discount had been given to the buyers at these two rates. In disallowing the higher rate of discount he held that this was given for advance payment. The Collector (Appeals) upheld the order on the ground that cash discount made for payment prior to the delivery of the goods amounted to interest and was, therefore, not admissible. He also did not believe the assessee's claim that there was a typing error in the circular which itself specified cash discount at two different rates.
2. We have heard Shri M.P. Dev Nath, Advocate for the appellants and Shri M. Ali, JDR for the Revenue.
3. The higher discount was offered not only for advance payment but also for payment against delivery. There is no doubt that cash discount at variable rates are admissible depending upon the circumstances under which the payment is made. The Assistant Collector is on record to the effect that the evidence had been produced before him that discount had been extended under two different rates. The order of the Assistant Collector is of finalisation of the price lists. This aspect does not seem to have been taken into account by the Collector. The assessee at all times claimed that they had advertised the fact that two discount rates were available to their buyers. Beyond expressing doubt [about the] circular had made a mistake the Collector in his order has not established any factor leading to his belief that cash discount at two different rates was not admissible. We find that there was no cause for the Assistant Collector not to accept the cash discount at two different rates. At this stage Shri Ali submits that in a case where a cash discount is offered exclusively for payment in advance i.e., before despatch of the goods then the Collector's belief that against advance payment notional interest would be includible in the assessable value would have merit. We have examined this submission. For the notional interest at such advance payment to be included in the assessable value, firstly it would have to be established that there is clear nexus between the advance payment and price at which the goods are offered to be sold; and secondly, a specific allegation to this effect would have to be made in the Show Cause Notice. In the proceedings before us, no order can be made or finding given on this submission. The appeal succeeds. Lower orders are set aside.
Appropriate relief, if any, is directed.