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TMI Blog1976 (10) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... cise duty is leviable in accordance with the provisions of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act) on an ad valorem basis. It has been selling its product at different rates of different customers, of whom there are three main categories. In the first category fall soap manufacturers who purchase all their requirements of sodium silicate from the petitioner firm. The second category consists of soap manufacturers who purchase sodium silicate from the petitioner firm as well as from other concerns. The third category comprises parties other than soap manufacturers. Customers falling in the first category are sole suppliers of sodium silicate by the petitioner firm at rates which are lower by Rs. 2 per quin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises and Salt Act, 1944." The letter required the petitioner firm to explain why recovery of duty reckoned on the higher price mentioned therein be not made from it for the period from 1-3-1970 to 31-1-1971. 3. In reply to the letter above mentioned, the petitioner firm asserted that it was the sole Judge of the prices to be charged by it from various customers that it was fully within its rights to allow different rates for the sale of sodium silicate to different customers and that excise duty could be charged by the concerned authorities only on the basis of the actual price. 4. The stand taken by the petitioner firm did not find favour with the Superintendent of Central Excise, Coimbatore (the second respondent), who, on 24-12-19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed was for the first time made on 5-6-1971, so that it could not relate to the period prior to 5-6-1970. The demand made relates to the period from 1-3-1970 to 31-1-1971, and is clearly time barred in so far as the period from 1-3-1970 to 4-6-1970 is concerned in respect of the period last mentioned, therefore, the entire proceedings are illegal and to that extent the show cause notice dated 24-12-1971, the demand notice dated 5-12-1972, and the order dated 22-5-1972 are liable to be struck down and are hereby quashed. 7. The only other contention raised by learned counsel for the petitioner firm is that it was liable to pay duty only on the price actually realised by it even though such price varied from customer to customer so long as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foresaid." 8. Dealing with the expression 'wholesale cash price' their Lordships of the Supreme Court observed in A.K Roy v. Voltas Ltd. 1977 E.L.T. (J 177)=A.I.R. 1973 S.C. 225 at 230 - "There can be no doubt that the 'wholesale cash price' has to be ascertained only on the basis of transactions at arms length. If there is a special or favoured buyer to whom a specially low price is charged because of extra-commercial considerations e.g. because he is relative of the manufacturer, the price charged for these sales would not be the 'wholesale cash price' for levying excise duty under S. 4(a) of the Act. A sole distributor might or might not be a favoured buyer according as terms of agreement with him are fair and reasonable and were ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customers consists of soap manufacturers who lift very large quantities of the product of the petitioner firm and presumably such quantities are far in excise of those purchased by customers comprised in the third category. There is thus a very rational commercial basis for giving more liberal trade concessions to the second category of customers as compared to the third category thereof. Again, as stated above, the first category of customers are soap manufacturers who buy all their requirements of sodium silicate from the petitioners firm only. It is safe to assume that such requirements embrace quantities larger to a substantial extent than those purchased by customers pertaining to the second category and in this view of the matter, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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