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Issues Involved:
1. Whether the trade discount given by the petitioner to its dealers should be included in the normal price for the purposes of charging excise duty. 2. Whether the dealers of the petitioner are "related persons" within the meaning of Section 4 of the Central Excises and Salt Act, 1944. 3. Whether the demand for differential duty is barred by limitation under Rule 10 of the Central Excise Rules, 1944. Issue-wise Detailed Analysis: 1. Trade Discount Inclusion in Normal Price: The central issue is whether the trade discount of Rs. 110/-, Rs. 145/-, and Rs. 165/- given on different models of mopeds should be included in the normal price for the purposes of excise duty. According to Section 4(4)(d)(ii) of the Central Excises and Salt Act, 1944, the value of excisable goods does not include trade discount provided it is not refundable and is allowed in accordance with the normal practice of the wholesale trade at the time of removal. The court found that the commission paid to dealers was not a normal trade discount but remuneration for organizing sales and providing facilities. The dealers functioned as extensions of the petitioner company, and the commission was contingent on fulfilling specific conditions, indicating a direct and indirect financial relationship. Therefore, the trade discount should be included in the normal price for excise duty purposes. 2. Dealers as "Related Persons": The court examined whether the dealers were "related persons" under Section 4 of the Central Excises and Salt Act, 1944. A "related person" is defined as someone associated with the assessee such that they have mutual interest in each other's business. The court noted that the dealers were bound by agreements that established a close relationship with the petitioner company, making them more than independent buyers. The Supreme Court's decision in Union of India v. Bombay Tyre International Ltd. was applied, which clarified that a distributor who is a relative of the assessee is a related person. The court concluded that the dealers, although not holding companies or subsidiaries, had substantial mutual interest with the petitioner company, making them related persons under the Act. 3. Limitation for Differential Duty Demand: The petitioner argued that the demand for differential duty was barred by the six-month limitation period under Rule 10 of the Central Excise Rules, 1944. However, the court found that the petitioner had wilfully suppressed the fact of mutual interest between the dealers and the company, which extended the limitation period to five years under Rule 10(a). The allegation was not about non-furnishing of agreements but about misrepresenting the nature of the dealers as unrelated persons. Therefore, the demand for differential duty was not barred by limitation. Conclusion: The writ petition was dismissed, and the court held that the trade discount should be included in the normal price for excise duty purposes, the dealers were related persons under the Act, and the demand for differential duty was not barred by limitation. The petitioner was granted leave to appeal to the Supreme Court, and the bank guarantee furnished by the petitioner towards the differential duty would not be enforced during the time available to move the Supreme Court.
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