Per Justice U.L. Bhat :

These appeals are directed against the common order in appeal dated 25.6.92 passed by the Collector (Appeals), Allahabad, confirming the two separate orders passed by the Assistant Collector, Kanpur approving certain price lists for two different factories and directing appellant to pay duty on the basis of approval order.

2. Appellant, engaged in the manufacture of washing powder and detergent cakes, filed price lists with reference to the two factories showing excisable goods as washing powder, tariff classification as 3402.90, the wholesale prices for different States, the unit of sale as "1 bag (50 plastic pouch of 1 Kg. each plus 1 Kg. detergent cake (125 gm. x 8 = 1 Kg.), the trade discount as 8 detergent cakes of 1 Kg. under Chapter Heading 3481.20 as free gift and claiming the declared value as the value for approval. The Proper Officer approved the price lists after disallowing deduction of the value of 8 detergent cakes. He also directed duty to be paid on this basis. The short question is whether the value of 8 detergent cakes (1 Kg.) claimed as free gift or trade discount is admissible for deduction from the wholesale price declared. It is seen that the Proper Officer struck of all references to detergent cakes and free gift. According to the learned counsel for the appellant, there was no wholesale sale of only detergent powder and 50 pouches of detergent powder along with 8 detergent cakes, all packed in a bag was the unit of sale and such bag or bags only were being sold to wholesalers at the prices indicated in the price lists, that as a matter of fact the prices did not include any price on account of detergent cakes as the cakes were being given as gift or trade discount to the wholesalers. He also contended that there was no obligation on the wholesaler to pass on the detergent cakes or any part thereof to the retailers or the ultimate consumers, though it was open to him to do as he pleased, that the cakes were intended to be part of the margin of the wholesaler and therefore, the value thereof should be treated as trade discount. Shri M. Ali, JDR rebutted these contentions and stated that while trade discount could be in cash or in kind, trade discount by way of goods could be allowed only if the goods are of the same kind declared and if different goods also manufactured by the same manufacturer are given as gift to the wholesaler, that cannot be regarded as trade discount by way of quantity discount. According to him, quantity discount is admissible only if a higher quantity is delivered for the price of lower quantity. Both sides placed reliance on certain decisions.

3. Shri M. Ali, JDR placed reliance on two decisions of the Tribunal, namely, Glaxo India Ltd. [1995 (8) RLT 1 (T) = 1995 (76) ELT 451 (T)] and Hindustan Cocoa Products [1996 (17) RLT 846 (T)]. In Glaxo India Ltd. consumers purchasing packets of mango complan and glucon D manufactured by the appellant were being given gift of plastic shaker and spoon. Appellant filed a price list claiming deduction of one shaker and spoon as free gift to customers. The statutory authorities disallowed deduction and the Tribunal upheld this order. The two Member Bench which decided the case held that trade discount may be in cash or in kind and that the quantity discount is a form of trade discount which is permissible if it is allowed in the form of goods. The Bench indicated that quantity discount is where purchaser gets excess quantity for a price contracted in respect of a lower price. It was thought that giving gifts other than manufactured articles would be an incentive to sale promotion and cannot be considered as trade discount. It was noticed that gifts were to be delivered to the consumers by the wholesale buyers and not to be appropriated by the wholesale buyer. Even if it is assumed that gifts were given to the wholesale buyer, the gift was with the condition that the same has to be passed on to the customer. The intenti