9911796707
TMI Blog1979 (1) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... Messrs Sikri and Grover are the main buyers for sale of the products of the petitioner, at Bombay. Sikri and Grover, who have selling branches at Bombay, Calcutta, New Delhi and Madras, sell the petitioner's products to dealers, manufacturers and public sector undertakings. There is no discrimination in the prices at which the petitioner's products are sold to Sikri and Grover when compared with the prices at which they are sold to wholesale buyers. But, of necessity, the petitioner has to include post manufacturing expenses such as cost of transportation, insurance, packing, octroi, sales tax and overheads of branches, in the price at which the products are sold to Sikri and Grover. If the sales are effected on deferred terms, the selling price also carries a premium of interest. On account of this, whenever Sikri and Grover sell the products to dealers, manufacturers etc., their price will include excise duty, octroi, sales tax, packing and forwarding charges etc., included in their purchase price. 2. The petitioner company does not have bonded warehouses in different parts of the country. Therefore, excise duty is paid at the gate of the factory. The payment of excise duty wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 4, the Revenue called upon the petitioner to file a fresh price-list in accordance with the new section. The petitioner accordingly filed a revised price-list, but the Revenue insisted that the assessable value should be that value at which Sikri and Grover sell their products at Bombay. There was protracted correspondence between the petitioner and the respondents on the question of fixation of value but to no avail. 6. The petitioner's contention in its affidavit is that since no change has been effected to Section 3 of the Act which is the charging section, the amendment effected to Section 4 cannot alter things in any manner and, in any case, since its products are capable of being sold and are actually being sold, though in small quantity, at wholesale rate at factory gate, it is that rate which must be taken us the price for levy of excise duty, and not the price at which Sikri and Grover sell the products at Bombay. The view taken by the Revenue, that the price of the petitioner's products should be determined with reference to the sale figures of Sikri and Grover at Bombay, is opposed to the dictum contained in A.K. Roy and another v. Voltas, AIR 1973 S.C. 225=1977 E.L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n prescribed by Scction 4(1)(a) can be relied upon only where the wholesale buyer is not a related person. On the other hand, if the goods are generally sold through related persons, then the normal price should be reckoned in terms of clause (iii) of the proviso to Section 4(1)(a) i.e. the price charged by the related person to wholesale dealers. lnasmuch as the petitioner itself has stated that the bulk of its goods are sold through Sikri and Grover at Bombay, it is the price at which Sikri and Grover sell the products to dealers, manufacturers and public sector undertakings that must be taken as the normal price. The respondents have stated that the amended Section 4 has made significant changes in the old Section 4 and the new Section has specifically provided for two types of evaluation i.e. (1) cases where the goods are sold through a non-related person and (2) cases where the goods are sold through related persons. Section 4, as amended, does not envisage determination of the price at which the products are capable of being sold in wholesale at the time of delivery from the factory. Rule 6 of the Valuation Rules has no application to the present case, because clause (iii) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Sikri and Grover when sales are effected to them at Bombay and, on that score too, Sikri and Grover cannot be treated as a related person. The answer of the respondents to these contentions is that because the bulk of the goods are sold to Sikri and Grover, and they, in turn, market the goods to wholesalers, it must be taken that Sikri and Grover are a `related person'. I am afraid the statement of the respondents in this behalf cannot be accepted. It was held by the Supreme Court in A.K Roy Ors v. Voltas, AIR 1973 S.C. 225=1977 E.L.T. (J 177), that `wholesale cash price' has to be ascertained on the basis of transactions at arms length unless the department is able to prove the existence of a special or favoured buyer to whom a specially low price is charged because of extra commercial considerations. The abovesaid dictum of the Supreme Court has been expressed in the following manner - P10.5M "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horities to go into the question whether the wholesale rate given by the assessee for the purpose of excise assessment is with reference to sales held at arms length or sales effected to related persons. Even so, there is no escape from the position that in order to classify a person within the terminology of 'related person', the department must prove that the person and the assessee have direct or indirect interest in the business of each other. This is made clearly by the definition of the term 'related person' contained in Section 4(4)(c). The respondents, however. have not put forward any material to show that Sikri and Grover on the one hand and the petitioner on the other have direct or indirect interests in the business of each other. The resultant position is that the respondents have not shown a nexus of interest between the petitioner and the alleged related person in the business of each other, nor have they shown that the bulk of the petitioner's products have been sold to Sikri and Grover at such concessional rates as to lead to the inescapable conclusion that extra commercial consideration have weighed with the assessee to charge such a concessional rates to Sikri an ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
