M. Santhanam, Member (J)

1. The application for revision filed by the appellants before the Central Government is being treated as an appeal. This appeal is directed against the Order-in-Appeal No. 1032-1034/C.E.-79, dated 13-9-1979 passed by the Appellate Collector of Central Excise, Delhi.' Through a common order, the Appellate Collector has considered three cases involving identical issues; the present appeal is restricted to the period 1-2-1970 to 31-12-1972.

2. The appellants are manufacturers of electrical fans under the brand name of 'ORIENT' in their factory at Faridabad. The usual marketing procedure of the appellants during the material period was to distribute their products area-wise through chief distributors. There is no sale of the goods by the appellants to these distributors. The appellants despatched the goods to the Chief Distributors from their factory on consignment/transfer basis. These distributors explore the market and sell the goods according to the areas assigned to them. These distributors normally sell their goods to : -

(i) Dealers and Retailers,

(ii) Bulk consumers such as commercial and industrial houses, builders and building contractors, hospitals, cinema and theatre houses, etc., and

(iii) Government buyers under rate contract such as direct demand officers, government and semi-government departments, public sector undertakings, statutory bodies.

The appellants fix their price and allow trade discount to the dealers and retailers. The trade discount consists of :-

(a) Basic Trade discount,

(b) Cash discount,

(c) Quantity discount or overriding discount in accordance with its Scheme 1, and

(d) Quantity discount or incentive bonus discount in accordance with its Scheme II.

3. In their price list the appellants claimed the following deductions from the wholesale cash price : -

(a) Basic Trade discount,

(b) Cash discount,

(c) Quantity discount or overriding discount as per Scheme I,

(d) Quantity discount or incentive bonus discount as per Scheme II,

(e) Chief Distributors' commission,

(f) Expenses incurred on account of packing,

(g) Expenses incurred on transportation,

(h) Post-manufacturing expenses on account of advertisement, godown rents, transit insurance and insurance charges on stocks,

(i) Price of speed control regulators included in the prices of electric ceiling fan, and

(j) Selling profits to be worked out as the difference between the nett selling prices applicable for sales to BULK CONSUMERS and realisation on sales from dealers and retailers at LIST PRICES minus various trade discounts.

4. The Assistant Collector, Central Excise, Faridabad, in his Order-in-Original No. 187 of 1977, dated 18-2-1977 pertaining to the period February 1970 to December 1972 allowed only the trade discount and cash discount for arriving at the assessable value. He disallowed the other deductions claimed. The appellants were paying the duty under protest. The Appellate Collector in his order allowed cash discount, quantity discount of the first type and Chief Distributors' commission. He disallowed the admissibility of the expenses relating to :-

(i) Packing,

(ii) Cost of transportation,

(iii) Incentive bonus discount or quantity discount of the second type,

(iv) Speed control regulator,

(v) Other post-manufacturing expenses, and

(vi) Selling profits.

The present appeal is directed against the order rejecting the above heads of deductions.

5. We shall now take up the items concerned in the same order.

6. Shri Bedi, the learned counsel for the appellants stated that in respect of packing charges, the fan became complete before the packing and that packing was needed for the purpose of facilitating transport, storage and for preserving it from being damaged. The packing was also not fan-wise but in a consolidated manner and according to convenience. He urged that such packing could neither be held nor said to be essential, incidental or ancillary to the process of manufacture. So he claimed that the cost of such packing should not b