1999 (9) TMI 108 - AT - Central Excise

Summary

Issues Involved:
1. Whether different values for the same goods can be applied when sold at the factory gate and at depots to different classes of buyers u/s 4 of the Central Excise Act, 1944.
2. Whether varying trade discounts to wholesale dealers located at different stations are permissible.
3. Whether ex-factory price should be the basis for assessment in case of clearance made to buyers located anywhere in the country.
4. Whether depot sales can be treated as sales to a different class of buyers.

Summary:

Issue 1: Different Values for Same Goods
The primary issue is whether different values for the same goods can be applied when sold at the factory gate and at depots to different classes of buyers u/s 4 of the Central Excise Act, 1944. The Tribunal held that different classes of wholesale dealers may have different prices on account of different trade discounts offered to them purely on commercial considerations. The manufacturer must establish by cogent evidence that such deductions were granted based on commercial considerations.

Issue 2: Varying Trade Discounts
The Tribunal referred to the Supreme Court's decision in *Govt. of India v. Madras Rubber Factory Ltd.*, which held that there can be different classes of wholesale buyers and the ex-factory sale price to one class cannot be taken as the price in respect of goods sold to another class of buyer. The Tribunal concluded that varying trade discounts to wholesale dealers located at different stations are permissible if they are based on commercial considerations.

Issue 3: Ex-factory Price as Basis for Assessment
The Tribunal rejected the argument that ex-factory price should be the basis for assessment in case of clearance made to buyers located anywhere in the country. The Tribunal emphasized that the price realized from one class of wholesale dealers or from a special customer like the Government cannot be the basis for assessment for another class of buyers.

Issue 4: Depot Sales as Different Class of Buyers
The Tribunal held that wholesale dealers of a particular region can constitute a separate class of buyers. When sales at the factory gate are to one class of buyers and sales from depots to another class, the ex-factory price charged cannot be the relevant normal price for assessing duty on those goods. The Tribunal concluded that the question of whether a wholesale buyer or dealer is a separate class is a question of fact and must be decided based on the evidence provided by the manufacturer.

Conclusion:
The appeals by the Department were dismissed, and the orders passed by the Commissioner (Appeals) were upheld. However, in the case of *Collector of Central Excise, Aurangabad v. M/s. Taparia Tools Ltd., Nasik*, the appeal of the Revenue was allowed due to different facts, specifically the unjustified higher deduction of 35% in relation to goods transferred to M/s. M.J. & Sons.

Disposition:
- Appeals in the cases of *Collector of Central Excise, Chandigarh v. M/s. Royal Biscuits (P) Ltd.*, and *Collector of Central Excise, Chandigarh v. M/s. Bakemans Industries (P) Ltd.* were dismissed.
- Appeal in the case of *Collector of Central Excise, Aurangabad v. M/s. Taparia Tools Ltd., Nasik* was allowed.