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TMI Blog1976 (12) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... ners to the wholesale market". 2. The short facts are that the five per cent equity share capital of the petitioner company is owned by one Ciba-Geigy of India Ltd., formerly known as Ciba of India Ltd. On or about 24-3-1971, the agreement Annexure A, was entered into by the petitioner company with the said company Ciba-Geigy of India Limited under which the petitioners agreed to sell to the said buyers certain Urea formaldehyde resins and certain Melamine formaldehyde resins in accordance with the programme drawn by the seller and the buyer and the petitioners had agreed to supply and sell the same to the said buyers. Thereafter on or about 7-12-1971, an agreement was entered into between the petitioners on one hand, one Swiss Company on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be wholesale cash price for which an article of the like kind and quality is sold or is capable of being sold at the time of the removal of the article chargeable with duty from the factory or any other premises of manufacture or production for delivery at a place of manufacture or production, or if a wholesale market does not exist for such article at such place, at the nearest place where such market exists. Mr. Gandhi, the learned advocate appearing for the petitioners contended that by the impugned trade notice, an attempt was made by the department to fix the value for the purpose of Central Excise duty on a new standard different from the one laid down in the above mentioned Sections 3 and 4 of the Act and Seetion 4 in particular. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of excise. The second or subsequent price even though on wholesale-basis, is not material. If excise were levied on the basis on second or subsequent wholesale price, it would load the price with a post-manufacturing element, namely, selling cost and selling profit of the wholesale dealer. That would be plainly to the true nature of excise. Secondly, this would also violate the concept of the factory gate sale which is the basis of determination of value of the goods for the purpose of excise. There can, therefore, be no doubt that where a manufacturer sells the goods manufactured, by him in wholesale to a wholesale dealer at arms length and in the usual course of business, the wholesale cash price charged by him to the wholesale dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the above-quoted case. We have, therefore, no hesitation in holding that the latter part of the Direction No. 2 namely, "equal to the value charged by the brand-name owners to the wholesale market" as put in blanket terms is ultra vires the authority of the Collector of Central Excise, who otherwise under Section 37(20) and Rule 232 of the Central Excise Rules is entitled to issue supplemental directions in the form of a trade notice and above power were fairly and frankly conceded even by Mr. Gandhi for the petitioners. 4. It is to be recalled here that the Atic Industries's case (supra) was a case of contract between the manufacturer and the seller commanding 50 per cent of the holding equity shares of the company. In the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ady stated that the petitioner have no grievance to be made in that contention. Clause 4 in ex facie the extension of clause 2 which we are inclined to strike down in its latter part and obviously it shall have to fall through along with it. 7. We, however, make it clear that if the department thinks that this alleged contracts Annexure A and B are only a camouflage to screen the manufacturer of the goods in question by the buyer, it will be open to the department to have recourse to law and it will be perfectly within their statutory powers to take such an action as deemed fit. Equally it will be open to the administration to enquire and find out the real value of the goods for the purpose of duty in strict compliance with Section 4 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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