1996 (9) TMI 383 - AT - Central Excise

Summary

Issues:
1. Allegation of selling goods at different prices to different buyers.
2. Determination of whether the buyers constitute different classes of buyers under Section 4 of the Central Excises & Salt Act, 1944.

Analysis:
The case involved M/s. Perfect Electric Concern Pvt. Ltd. selling electric horns at different prices to M/s. Telco and M/s. Perfect Engg. Stores Sales (Pessa). The Assistant Collector found that the lower prices to Pessa were to avoid laying off labor, indicating Pessa as favored buyers. The Collector (Appeals) upheld this view, considering Pessa as favored buyers. Despite the absence of the appellants during the hearing, it was deemed that the matter could proceed. The Department highlighted common interests between the appellants and Pessa, raising concerns about the arrangement of lower prices. The Tribunal analyzed whether the relationship between the appellants and Pessa qualified as that of related persons under Section 4 of the Act, emphasizing the definition of "related person" and citing the Bombay Tyre International case for clarity.

The Tribunal considered the distinction between industrial consumers and distributors, asserting that different classes of buyers can exist under excise law, allowing for varied pricing. Referring to the Jagdish Electronics Pvt. Ltd. case, it was established that buyers in different locations could constitute separate classes. The Supreme Court's decision in Metal Box (India) Ltd. v. Collector of Central Excise further supported the concept of distinct buyer classes. The terms of sale to Pessa, as outlined in Annexure 'H,' and Pessa's acceptance of these terms were examined. Notably, Pessa had to appoint additional distributors and adhere to strict conditions, indicating they operated as a different class of buyers. Consequently, the Tribunal concluded that Pessa's compliance with various terms and organization of sales in different regions justified considering them as a distinct class of buyers under Section 4. Therefore, the decision of the Collector (Appeals) was overturned, and the appeal was accepted.