The main legal point established in the judgment is that the assessee was entitled to a trade discount of 20% based on the uniform practice of giving the discount to the majority of its dealers.

( 1 ) THE short point which arises for determination in these civil appeals filed by the assessee is - Whether the assessee was entitled to 20% trade discount.

( 2 ) M/s. Elgi Equipments Ltd. , having registered office at Coimbatore, have four factories located at four different places. They manufacture compressors, pumps, service station equipments etc. M/s. Elgi Equipments ltd. (assessees) claimed trade discounts varying from 10% to 45% on different products. They declared that such discount was a part of their "sales Pattern". During the course of assessment, the Department noticed certain price discrepancies. Therefore, an enquiry was made; statements of Directors were recorded and, on that basis, a show cause notice was given to the assessee claiming differential amount of duty of Rs. 40 lakhs. The assessee was also asked by the show cause notice as to why a penalty of rs. 10 lakhs shduld not be imposed.

( 3 ) IN these appeals, we are concerned with the period January, 1991 to April, 1992. The main case of the Department was that the appellant-assessee did not possess uniform sales pattern; that they gave different discounts to Area Distributors and dealers to whom goods were cleared directly at the factory gate and that even in such a case, the area Distributors were paid the balance 12% and therefore on account of this differential discount the assessees were not entitled to trade discount of 20%.

( 4 ) AS stated above, assessee is in the business of manufacturing service-station equipments. It is necessary to understand their sales Pattern. The goods were sold to three distributors. These sales were effected at the factory gate directly to the distributor allow ing 20% uniform discount on the list price however, in respect of sales to sub-dealers discount given was 8% and balance 12% Was given to the distributors as commission.

( 5 ) AT the outset, we may mention that show cause notice was the foundation for the levy of penalty. In the entire show cause notice, the requisite details have not been furnished namely, the total number of dealers, the number of main dealers, the number of sub-dealers and the rate of discount to main dealer and small dealers. The show cause notice proceeds on the basis of the statements of some of the sub-dealers or small dealers taken on record by the adjudicating authority. In a matter of this type, the Department should have given particulars of the total number of dealers, the total number of dealers who got the trade discount at 8% and the to tal number of dealers who got the trade dis count of 20%. There is no adjudication by the original authority on this point. Therefore, we have to proceed on the basis on the figures given by the assessee, namely, that the majority of the dealers got the benefit of 20% discount and a small minority of dealers got the benefit of trade discount of 8%. However the fact remains that assessee gave discount at all times at 20%, even when they gave discount of 8% to small dealers because even at that time they gave commission of 12% to big dealers. If that be the case, then, the sales pattern clearly indicates that as a matter of practice, the assessee has uniformly given the benefit of trade discount at 20%. It is well settled that while adjudicating upon questions relating to sales pattern, one has to find out whether the benefit of trade discount is given uniformly. On facts, we find that the asses-see has given trade discount of 20% uniformly to all its dealers.

( 6 ) IN this connection, we may cite the judgment of this Court in the case of Kirloskar brothers Ltd. v. Commissioner of Central excise, Pune. Vide paragraph 10, it has been held by this Court that in order to get the benefit of Section 4 (1 ) (a) (as it stood at the relevant time), the assessee has to establish that the discount claimed was in accordance with the normal practice of wholesale trade in the concerned goods sold to different classes of buyers, and it shall be subject to exi