1979 (11) TMI 111 - HC - Central Excise

Issues Involved:
1. Determination of the basis for assessing excise duty on goods sold at different prices to different customers.
2. Whether the highest price among different wholesale cash prices should be adopted for assessing duty.
3. Whether sales to an industrial consumer at a lower price can be considered as wholesale cash price under Section 4 of the Central Excises and Salt Act, 1944.

Issue-wise Detailed Analysis:

1. Determination of the Basis for Assessing Excise Duty:
The primary issue was whether the wholesale price for excise duty should be based on the lower price at which goods were sold to a bulk buyer (Indian Oxygen Limited) or the higher price at which they were sold to other customers. The court noted that Section 4 of the Central Excises and Salt Act, 1944, as it stood at the relevant time, provided that the value of an article for duty purposes should be deemed to be the wholesale cash price for which an article of like kind and quality is sold or is capable of being sold at the time of removal from the factory. The court emphasized that the determination of the wholesale cash price should not be influenced by extra-commercial considerations and should reflect genuine commercial transactions.

2. Adoption of the Highest Price for Assessing Duty:
The court examined whether the highest price among different wholesale cash prices should be adopted for assessing duty. It was argued by the Central Government Pleader that the highest price realized in the wholesale market should be the basis for determining the excise duty, as it reflects the price at which goods are capable of being sold. The court referred to the Supreme Court's decision in A.K. Roy v. Voltas Ltd., which clarified that the wholesale cash price should be based on genuine wholesale transactions at arm's length. The court concluded that the wholesale cash price should not necessarily be the highest price but should be based on genuine commercial transactions without extra-commercial considerations.

3. Sales to Industrial Consumer as Wholesale Cash Price:
The court addressed whether sales to Indian Oxygen Limited, an industrial consumer, at a lower price could be considered as wholesale cash price under Section 4 of the Act. The court noted that the term "wholesale" generally refers to sales in large quantities for the purpose of resale, rather than direct sales to consumers. The court referred to definitions from legal dictionaries and previous case law, including the Privy Council's decision in Vaccuum Oil Co. v. Secy. of State, which distinguished between wholesale and retail sales. The court concluded that sales to Indian Oxygen Limited, being an industrial consumer and not a reseller, could not be considered as wholesale cash price within the meaning of Section 4(a) of the Act as it stood prior to the amendment.

Conclusion:
The court dismissed the petition, holding that the duty should not have been determined based on the lower price at which sales were made to Indian Oxygen Limited. The court emphasized that the wholesale cash price for excise duty purposes should reflect genuine commercial transactions and should not be influenced by sales to consumers, even if in bulk. The court directed the parties to bear their own costs.

Judgment:
In the result, the Original Petition is dismissed. But in the circumstances of the case, we direct parties to suffer costs.

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