1985 (4) TMI 294 - AT - Central Excise

Summary

Issues: Classification and availment of concession under Notification No. 120/75-C.E., determination of assessable value based on relationship with distributors, consideration of distributors as related persons, interpretation of "related person" as per the Central Excises and Salt Act, 1944, applicability of Notification No. 120/75-C.E. based on invoiced price influence, evidence of commercial relationship with distributors, withdrawal of concession by Assistant Collector, confirmation by Appellate Collector, and legality of the orders.

Classification and Concession under Notification No. 120/75-C.E.:
The appellants, licensed manufacturers of machines and spare parts, opted for a concession under Notification No. 120/75-C.E. The Assistant Collector withdrew the concession citing that spare parts were only sold to distributors, affecting the assessable value determination under Section 4 of the Central Excises and Salt Act, 1944. The Appellate Collector upheld this decision, linking invoiced prices to the relationship between the appellants and distributors.

Interpretation of "Related Person" and Applicability of Notification:
The appellants argued that distributors should not be considered related persons and should benefit from the notification. They relied on a Supreme Court decision regarding the concept of "related person" in the Act. The Revenue contended that distributors should be treated as related persons, thus disqualifying the appellants from the concession.

Legal Interpretation of "Related Person":
The Tribunal analyzed the Supreme Court's definition of "related person," emphasizing mutual interest in each other's business for classification. The distributors named in the show cause notice were distinct legal entities, and no evidence showed any direct or indirect interest in the appellants' business. Following the Supreme Court's criteria, the distributors were not deemed related persons.

Influence on Invoiced Price and Commercial Relationship:
Notification No. 120/75-C.E. required the invoiced price to be unaffected by any relationship other than the sale of goods. The Tribunal found no evidence of concessional pricing due to extraneous factors or direct/indirect interest in the distributors' business. The sale to distributors did not limit availability to others, supporting the appellants' position.

Withdrawal of Concession and Legal Standing of Orders:
The Assistant Collector's withdrawal of the concession, upheld by the Appellate Collector, was deemed unsustainable. The Tribunal set aside the impugned orders, stating that the appellants were entitled to the concession under Notification No. 120/75-C.E. due to the lack of evidence supporting a related person relationship or influenced invoiced prices.

In conclusion, the Tribunal allowed the appeal, overturning the previous decisions and reinstating the appellants' entitlement to the concession under Notification No. 120/75-C.E.