Full Judgment
2. Short facts necessary for the disposal of the issue raised are as follows :- Respondent firm is engaged in the manufacture of branded pan masala.
They filed price list for transfer of goods to duty paid godown at Noida for sale to dealers in U.P., West Bengal and Maharashtra.
Deduction on account of average freight, insurance, regional trade discount in view of local sales tax, cash discount etc. were claimed. Department went into the correctness or otherwise of these claims. In the case of dealers in Maharashtra, the firm categorised them into two classes namely registered dealer and un-registered dealer. Registered dealers were those paying local sales tax on getting themselves registered with the Sales Tax Department.
Un-registered dealers were those who were not registered with the Sales Tax Department and were not paying sales tax. In the case of un-registered dealers, value was increased by 7% and in both cases no deduction was claimed on local sales tax. Respondent firm was also extending 2% cash discount to all dealers on the net invoice price. After considering the contention raised by the respondent, the Assistant Commissioner passed an order in original No. 73, dated 31-3-1997 in the following terms :- (a) Different assessable value for dealers located at Uttar Pradesh & West Bengal is permissible under Section 4 of Central Excise Act, 1944.
(b) Assessable value for registered dealer in Maharashtra is not admissible as per Section 4 and value for unregistered dealer in Maharashtra is the admissible value for sales in Maharashtra. Party is directed to debit Rs. 1,16,506.72 as short paid on goods cleared to registered dealer in Maharashtra.
(c) Equalised Freight, Insurance and octroiare admissible deduction.
Party is directed to debit Rs. 10,718.17 short paid on account of Insurance.
(d) Cash discount, turnover discount, Regional trade discount and Luxury tax are admissible deduction but as per actuals. Party is directed to debit Rs. 3,46,726.45 as duty on surplus amount collected under head of cash discount and not passed on to buyers.
Party is directed to debit/deposit local differential short paid duty of Rs. 4,73,951.34 as duty claimed under Section 11A ibid, within fifteen days of receipt of this order. Respondent herein challenged that order of the adjudicating authority before the Commissioner (Appeals) in appeal No. 24/CE/MRT/98. Commissioner (Appeals) in his order dated 12-1-1998 allowed classification of buyers situated in Maharashtra into two categories namely registered dealers and unregistered dealers. The difference in price of the goods sold to them was also accepted. Regarding the other matters, the case was remitted back to the adjudicating authority for fresh disposal.
3. In this appeal, the department challenged the correctness of the conclusion reached by the Commissioner (Appeals) in classifying purchasers situated in Maharashtra into registered and unregistered dealers. By preferring the cross objection, respondent disputed the correctness of the order of the Commissioner (Appeals) disallowing 2% trade discount to dealers.
4. Learned SDR argued that dealers in Maharashtra cannot be classified into two groups namely registered dealers and unregistered dealers.
According to him all registered dealers may not be paying sales tax.
Therefore, there is no justification in classifying all registered dealers into one class. We are not in a position to agree with learned SDR. Under the Sales Tax Act dealers are required to be registered with the department. Once they are so registered, they are bound by certain legal obligations which cause to them. They will have to maintain proper records, file proper returns and pay sales tax on sales effected by them. If registered dealer is not paying sales tax payable by him, it will be the lookout of the officer of the Sales Tax Deptt. to enforce the provision of the sales tax law. A registeredxlealer even if he is not paying sales tax will still continue to be a registered dealer as per the Act and rules of the sales tax law applicable to him.
Dealers registered under the sales tax law in force in the state must therefore be classified as a particular class as against those who are not registered. We hold that registered dealers and unregistered dealers belong to separate class. Different classes of wholesale buyers are contemplated by Section 4(1)(a) proviso (i) to the Central Excise Act. When mere is a intelligible differentia between registered dealers and unregistered dealers different values can be fixed for sale of goods as provided by the aforesaid provision of the Act. Accordingly, we find no merit in the appeal filed at the instance of the department.
5. Coming to the cross objection, the short question that arises for consideration is whether 2% trade discount offered by the manufacturer, namely the respondent herein, is deductible in computing the assessable value under Section 4 of the Act. Section 4(4)(d)(ii) of the Act provides that trade discount allowed in accordance with normal practice of the wholesale trade will not be included in computing the assessable value of the goods. It is common case that respondent manufacturer allowed 2% cash discount. If such cash discount is allowed and was made known to the trade, such discount is bound to be reckoned in computing the assessable value. On the facts of this case it is seen that only 96.72% of the purchasers had availed the benefit of this cash discount.
As per the provisions of the statute mentioned above, if the manufacturer allows trade discount that trade discount is not to be included in the assessable value. The said provision does not go to show that trade discount so allowed by the manufacturer should have been availed of by all the purchasers. 96.72% of the purchasers had availed it. Remaining negligible portion of the purchasers did not avail the benefit of the cash discount. That does not mean that manufacturer cannot have the benefit of getting the cash discount excluded in computing the assessable value of the goods manufactured.
This view of ours is supported by the decision of this Tribunal in the case of Collector of Central Excise, Meerut v. Stallion Shox Ltd. reported in 1996 (85) E.L.T. 139 (Tribunal). This Tribunal took the view that the cash discount of 2 Vi % allowed by the manufacturer therein is liable to be deducted from the price list irrespective of the fact that all the customers might not have availed of the benefit of the discount. In view of what has been stated above, we allow the cross ob-jection.Trade discount of 2% allowed by the respondent must be deducted from the price of the goods for arriving at the assessable value.
6. Learned Counsel representing the respondent manufacturer submitted before us that he is not pressing the claim put forth in the memorandum of cross objection relating to Rs. 10,718.17. It is stated to be duty short paid by the respondent in the impugned order.
7. In view of our conclusions on the appeal and memorandum of cross objection, nothing further remains to be examined by the adjudicating authority as ordered in the impugned order passed by the Commissioner (Appeals). So the order of remand passed by Commissioner (Appeals) is also vacated.