1982 (12) TMI 49 - HC - Central Excise

Valuation Sales through main dealer and also to other independent purchasers within same territory

Issues Involved:
1. Determination of excisable value of motor vehicles and other products manufactured by the respondents for excise duty purposes.
2. Whether the main dealer appointed by the respondents is a "related person" under Section 4(4)(c) of the Central Excises and Salt Act, 1944.

Issue-wise Detailed Analysis:

1. Determination of Excisable Value:
The primary question in this writ appeal concerns the determination of the excisable value of motor vehicles and other products manufactured by the respondents for the purpose of excise duty under the Central Excises and Salt Act, 1944. The Union of India contends that the excisable value should be based on the price at which the main dealer sells the products to customers, arguing that the main dealer is a "related person" under Section 4(4)(c) of the Act. The respondents, however, argue that the main dealer is not a related person, and thus, the excisable value should be the price at which the respondents sell their products to the main dealer.

2. Related Person Definition under Section 4(4)(c):
The court examined Section 4 of the Act, particularly focusing on the definition of "related person" in Section 4(4)(c). According to the Act, a related person is one who is so associated with the assessee that they have an interest, directly or indirectly, in the business of each other. This definition includes a holding company, a subsidiary company, a relative, a distributor of the assessee, and any sub-distributor of such distributor.

Analysis of "Distributor" and "Related Person":
The court referred to various dictionary definitions of "distributor" and noted that in commercial parlance, a distributor is often understood as an agent who sells goods on behalf of the manufacturer. The court emphasized that a distributor acting as an agent earns a commission and does not buy goods on his own account.

The court then reviewed relevant case law, including judgments from the Delhi High Court in Jay Engineering Works Ltd. v. Union of India and the Bombay High Court in Amar Dye Chem. Ltd. v. Union of India. These cases highlighted that the term "distributor" should be given a restricted meaning, and a distributor acting as an agent for the manufacturer should be distinguished from a buyer who purchases goods from the manufacturer for resale.

Application to the Present Case:
The court analyzed the agreement between Ashok Leyland Ltd. and the main dealer. The agreement stipulated that Ashok Leyland would sell products to the main dealer at wholesale prices, with the main dealer making payment before delivery. The court noted that the agreement was on a principal-to-principal basis rather than a principal-agent relationship. Additionally, Ashok Leyland retained the right to make direct sales within the main dealer's territory without any obligation to pay a commission to the main dealer.

Based on these observations, the court concluded that the main dealer was not a distributor within the meaning of "related person" under Section 4(4)(c) of the Act. Consequently, the assessable value for excise duty purposes should be the price at which the respondents sell their products to the main dealer, not the price at which the main dealer sells to customers.

Conclusion:
The court upheld the judgment of the learned Single Judge, dismissing the writ appeal filed by the Union of India. The assessable value for excise duty purposes shall be the price at which the respondents sell their products to the main dealer. The court also refused the appellant's oral prayer for leave to appeal to the Supreme Court, stating that the case did not involve any substantial question of law of general importance.

Order:
The writ appeal is dismissed with no order as to costs. The prayer for a certificate to appeal to the Supreme Court is refused.

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