1979 (2) TMI 109 - HC - Central Excise

Summary

Issues Involved:
1. Constitutionality of Section 4 (as amended) of the Central Excises and Salt Act, 1944.
2. Authority of the Assistant Collector of Central Excise to review an approved price-list.
3. Retrospective review of the price-list by the Assistant Collector.
4. Determination of whether the petitioner-company and its buyers are "related persons."
5. Normal price charged by the petitioner-company.
6. Application of mind by the Assistant Collector of Central Excise.
7. Application of mind by the Appellate Commissioner.
8. Legality of orders at Annexures "H" and "N."

Issue-Wise Detailed Analysis:

1. Constitutionality of Section 4 (as amended) of the Central Excises and Salt Act, 1944:
The court declared that the concept of "related person" in amended Section 4 is ultra vires the legislative competence of Parliament under Article 246 read with Entry 84 in the Union List and Entry 54 in the State List. The expression "the buyer is not a related person and......." and proviso (iii) to clause (a) in sub-section (1) of Section 4 were struck down.

2. Authority of the Assistant Collector of Central Excise to review an approved price-list:
The court did not express any opinion on this issue because the petitioner-company succeeded on the ground that they and their buyers were not "related persons."

3. Retrospective review of the price-list by the Assistant Collector:
Similar to the second issue, the court did not express any opinion on this matter due to the success of the petitioner on the "related persons" ground.

4. Determination of whether the petitioner-company and its buyers are "related persons":
The court held that the Central Excise authorities erred in applying the norm of "inter-connected undertakings" from the Monopolies and Restrictive Trade Practices Act to determine "related persons." The definition of "related person" in Section 4 of the Central Excises and Salt Act was examined, and it was concluded that the petitioner-company and its buyers, Messrs Atul Products Limited and Messrs Imperial Chemical Industries (India) Private Limited, did not have mutual business interests and were not "related persons."

5. Normal price charged by the petitioner-company:
The court did not find it necessary to decide this issue due to the conclusion on the "related persons" matter.

6. Application of mind by the Assistant Collector of Central Excise:
The court did not address this issue because the primary issue of "related persons" was resolved in favor of the petitioner.

7. Application of mind by the Appellate Commissioner:
Similarly, this issue was not addressed due to the resolution of the "related persons" matter.

8. Legality of orders at Annexures "H" and "N":
The court quashed the orders of the Assistant Collector of Central Excise and the Appellate Collector of Central Excise and Customs, and directed the Central Excise authorities to cancel the demands made on December 31, 1976, and January 19, 1977.

Additional Points:
- The court directed the respondents to refund any excess amount recovered from the petitioner-company with interest at the rate of six percent per annum.
- The respondents were also directed to pay the costs incurred by the petitioner in connection with the Bank Guarantee furnished.
- The court granted a certificate of fitness under Articles 132 and 133(1) of the Constitution for appeal to the Supreme Court and stayed the operation of the order for two months to allow the respondents to obtain an interim order from the Supreme Court.