Kerala Electrical and Allied Vs. the Commissioner of Central - Court Judgment

Excerpt:
1. a show-cause notice was issued, as it was observed that sales were effected though deposits only and a deduction of 22% as trade discount at time of clearance at the factory gate availed was not permissible for the period april 1994 to september 1994. the commissioner (appeals) came to the following finding. "the issue thus is whether the goods as have been dispatched to depots are entitled to discounts and if such removals are to be considerate as sales. no doubt, the orders have been placed a the factory, but the nature of clearances from the factory to the depot amounts to stock transfer and not sale.that these are not sales is confirmed by the fact that they have not paid sales tax on them. that being so, the revenues's contention is correct that the transaction between factory to its depot ism not a transaction between principal to principal. it is only a stock transfer of goods and not actually sale and in the absence of sale, the quantum of trade discount cannot be applied merely on the basis of the quantum of buyers' order. the provision of section 4(4)(d)(ii) does not envisage grant of trade discount based on buyers' order. the actual act of sale takes places form depots only. that being so, revenue's contention in this regard is correct and is upheld." and confirmed the demand after setting aside the order of assistant collector.present appeal is filed against this order of the commissioner (appeals). (a) the assistant collector, as it appears from his order, after inspecting the invoices issued from the palkaad factory as well as the depot accepted that the prices are uniform and therefore found nothing wrong in allowing this kerala state government under taking, the discount as it has been uniformly allowed to all their customers. (b) in lucas india service ltd (1996 (83) elt 441) the tribunal found that 'price charged at factory gate from the main dealer namely price less 35% to be taken as assessable value for all goods removed i.e. even for the goods sold at 25% discount to small dealers for depots. therefore, following this decision of the tribunal we would find no merits in the commissioner (appeals) orders, to deny the benefit of 22% discounts on removals to the depots.3. in view of our findings, the order of the commissioner (appeals) is set aside and order of assistant collector restored. appeal is allowed.

Judgment:
1. A Show-cause notice was issued, as it was observed that sales were effected though Deposits only and a deduction of 22% as Trade Discount at time of clearance at the factory gate availed was not permissible for the period April 1994 to September 1994. the Commissioner (Appeals) came to the following finding.

"The issue thus is whether the goods as have been dispatched to depots are entitled to discounts and if such removals are to be considerate as sales. No doubt, the orders have been placed a the factory, but the nature of clearances from the factory to the depot amounts to stock transfer and not sale.that these are not sales is confirmed by the fact that they have not paid Sales Tax on them.

that being so, the Revenues's contention is correct that the transaction between factory to its depot ism not a transaction between principal to principal. It is only a stock transfer of goods and not actually sale and in the absence of sale, the quantum of trade discount cannot be applied merely on the basis of the quantum of buyers' order. The provision of Section 4(4)(d)(ii) does not envisage grant of trade discount based on buyers' order. The actual act of sale takes places form depots only. That being so, Revenue's contention in this regard is correct and is upheld." and confirmed the demand after setting aside the Order of Assistant Collector.

Present appeal is filed against this Order of the Commissioner (Appeals).

(a) The Assistant Collector, as it appears from his Order, after inspecting the invoices issued from the Palkaad factory as well as the Depot accepted that the prices are uniform and therefore found nothing wrong in allowing this Kerala State Government under taking, the discount as it has been uniformly allowed to all their customers.

(b) In Lucas India Service Ltd (1996 (83) ELT 441) the Tribunal found that 'price charged at factory Gate from the main dealer namely price less 35% to be taken as assessable value for all goods removed i.e. even for the goods sold at 25% discount to small dealers for depots. Therefore, following this decision of the Tribunal we would find no merits in the Commissioner (Appeals) orders, to deny the benefit of 22% discounts on removals to the Depots.

3. In view of our findings, the Order of the Commissioner (Appeals) is set aside and order of Assistant Collector restored. Appeal is allowed.