- (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. 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 assesses was also asked by the show cause notice as to why a penalty of Rs. 10 lakhs should not be imposed.
(2.) 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%.
(3.) 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 allowing 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.;