Per G.A. Brahma Deva - The point to be considered in this case is whether supply of plastic shaker and spoon along with packets of Mango Complan and Glucon-D by the appellants to the consumers amounts to a trade discount qualifying for deduction in determining the assessable value of the goods manufactured and cleared by the appellants. .

2. The appellants are engaged in the manufacture of food products i.e. Mango Complan and Glucon-D. They filed a price list claiming deduction of the cost of one shaker (mug) Worth Rs. 4.20 and cost of one spoon of Rs. 0.75 as free gift to their customers. According to the Department the abatement of price on account of cost of shaker (mug) and spoon was not admissible under Section 4 of the Central Excises & Salt Act, 1944 Show cause notice was issued raising the demand of Rs. 14,288.10 and same was confirmed by the Assistant Collector disallowing the deduction of cost of shaker and cost of spoon supplied by the appellants as free gift. The appellants have become unsuccessful before the Collector (Appeals). Hence this appeal.

3. It was submitted on behalf of the appellants that gifts were offered to the customers in the nature of discount and as such quantity discount would be permissible deduction in determining the value under Section 4 of the Act. Shri Dushyant Dave, learned Counsel submitted that there is no material difference in between old Section 4 and new Section 4 as it was observed by the Supreme Court in the case of Bombay Tyre International (1983-14 ELT-1896) and it was held in the clarificatory judgment (Bombay Tyre International) reported in 1984-17 ELT-329 that trade discount in whatever name is described should be allowed to be deducted from price in determining the value. He said that trade discount is neither restricted nor specified in Section 4 of the Act, but it should be passed on to the buyers and same should be known to them before clearance and these two conditions are fulfilled in this case. He contended that excise duty is on manufacturing cost as it was held in the case of A.K. Roy and another Vs. Voltas Limited (1977-ELT-J-177) and trade discount need not be in case, but it can be in the shape of goods and quantity discount in the form of goods is an admissible deduction, and supply of free item is in the nature of quantity discount referring to the decision in the case of Queens Chemist Manufacturing Department Vs. Collector of Central Excise (1979 (4) ELT-J-454) and in the case of M/s Burlington's Exports (1981 (8) ELT-856). He also referred to the decisions in the case of Collector of Central Excise Vs. Weikfield Products Company (India) Limited (1993 (63) ELT-756) and Goodlass Nerolac Paints Limited Vs. Union of India (1993 (65) ELT-186 (Bombay) in support of his contention that trade discount/quantity discount is to be deducted out of the assessable value. He said that even if the free supply of items were held to be as part of the sales promotion, still the discount in respect of the same is permissible as the bonus articles are akin to discount in kind and the appellants had borne the cost of such free articles. He referred to the decision in the case of Bombay Latex & Dipersions Pvt. Ltd. V s. Collector of Central Excise, Bombay reported in 1985 (919) ELT-527.

4. Shri Satish Shah, learned JDR appearing for the Department submitted that supply of free gifts to the customers cannot be considered as quantity discount qualifying for deduction under Section4 (i) d (ii) of the Central Excises & Salt Act. The free supply of gift articles as per the schemes adopted by the appellants is an incentive to customers which is in the nature of sales promotion and expenses incurred on promotion of sale and advertisement are not deductible from the assessable value as it was held in the case of Bombay Tyre International Ltd. He said that case law referred to by the appellants was with reference to quantity discount and same is not applicable to the facts of this case. H