LexKIRLOSKAR BROTHERS LTD. versus COMMISSIONER OF CENTRAL EXCISE, PUNE.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
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KIRLOSKAR BROTHERS LTD.
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COMMISSIONER OF CENTRAL EXCISE. PUNE.·.
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MARCH 7, 2005
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[RUMA PAL, ARIJIT PASAY AT AND C.K. THAKKER, JJ.]
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Central Excise Act, 1944, SectionS4(/)(a) clause (i) of th~ pi·oviso, 2(k),
4(4)(e)-Class· of buye~s-Charging of lesser price from bulk bz1yers-
C Permissibility of -Held : For charging lesser price from different buyers,
assessee is required to establish {hat discount allowed and lesser price charged
was in accordance with normal practice and founded on some rqtiona/ basis-
Assessee having failed to show rational and commercial consideration to
distinguish bulk buyers from other wholesale buyers; charging of lower price
held not permissible.
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Assessee filed two price lists, one in Part-I and .other in Part-II for
same 'kind of product', showing a lesser price for sales to bulk buyer.
Revenue authorities issued notke rejecting the lower price on the ground
that the bulk buyers- cannot be distinguished from other wholesale bu'yers
and ·there cannot be more than one price for the same class of buyers.
E Assistant Collector confirmed proposal contained in the notice. Collector
(Appeals) however held in favour. of assessee. Revenue pre_ferred appeal
before CEGAT, which held thaf there is no rational or commercial
consideration to distinguish the bulk buyers from any other buyers.
Aggrieved assessee preferred the present appeal.
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Dismissing the appeal, the Court
HELD: I. Where the goods are sold to different class of buyers at
different price, then assessee is required .to establish that discount allowed
and the lesser price charged was in accordance with normal practice of
G the wholesale trade in such goods. One or two instances cannot be termed
as the normal practice of the wholesale trade. It essentially depends upon
the number Of person engaged in such trade. In the. instant case, the
assessee has not placed on record the number of persons engaged in the
wholesale trade. 1573-A, B, Cl
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568
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KIRLOSKAR BROTHERS LTD. v. C.C.E.
569
Metal Box India ltd. v. Collector o.l Central Excise, Madras 119951 2 A
SCC 90 and Gora Mal Hari Ram ltd. '"Collector of Central Excise. Delhi
1994(69) EL T 269, referred to.
2. J. Classification can be made on the basis of region depending upon
the quantum of turnover in a particular region and special factors
relatable to that region. It cannot be said that the discount should be B
uniform in all circumstances in all categories of buyers all over the
country. But discount has to be as per the normal practice of the wholesale
trade in such goods and the discount cannot be given on extraneous
considerations and has to be founded on some rational basis. (573-EI
2.2. There may be cases, where in a particular region there is a scope C
for increasing the turnover by giving incentive to some. But there must
be some intelligible criteria for treating the benefited persons differently
from others. Comparison may be made intra-region and not by taking all
regions together. The assessee has not shown the justification for wide
variation within the same region, and has failed to establish rational basis D
for selecting the persons. On considering the relevant factors, the
authorities and CEGAT ha\•e rightly recorded finding of fact that no
rational basis has been established. (573-G, H; 574-BI
Collector of Customs, Bombay v. Swastic Wollens (P) Ltd. and Ors.,
(19881 Supp. SCC 796; West Bengal Electricity Regulat01y Commission v. E
CESC ltd., (200218 SCC 715; Commissioner of Customs, Chennai v. Adani
Exports ltd. and Anr., (20041 4 SCC 367 and Commissioner of Customs,
Mumbai v. Mis Bureau Veritas and Ors., JT (2005) 2 SC 348, relied on.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6938 of 1999.
From the Judgment and Order dated 28.9.99 of the Central Excise,
Customs and Gold (Control) Appellate Tribunal, Western Regional Bench at
Mumbai in F.O. No. C-I/2444/WRB/1999 in A. No. E/2559 of 1994-A.
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Akhil Sibal, Rajan Sheth, Ms. Ruby Singh Ahuja, Ms. Nandini Gore,
Ms. Saloni Gupta, Ms. Kanika Agnihotri and Mrs. Manik Karanjawala for G
the Appellant.
K. Swami and B. Krishna Prasad for the Respondent.
The Judgment of the Court was delivered by
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SUPREME COURT REPORTS
[2005] 2 S.C.R.
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ARIJIT PASA Y AT, J. Appellant calls in question legality of the
judgment rendered by the West Regional Bench at Mumbai of the Customs
Excise and Gold (Control) AppelExcerpt shown. Read the full judgment & AI analysis in Lexace.