9911796707
TMI Blog1979 (10) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... on July 5, 1966. The agreement, which is annexed as Exh. A to the petition, inter alia provides that the Bata Shoe Company would provide for technical assistance for the manufacture of footwear and the petitioners would supply the entire production to Bata Shoe Company and the entire product would bear the brand name of Bata Shoe Co. The agreement was valid for a period of five years from the date of commencement of the production. The Central Government imposed the excise duty on footwear by a notification dated May 28, 1967 under Tariff Item 36 under the Schedule to the Central Excises and Salt Act, 1944. which reads as under : Item No. Description of Goods Rate of duty 36. Footwear and parts thereof in or i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The petitioners also claimed that in any event the duty on footwear casting less than Rs. 5/- is exempted under Notification dated December 1, 1967 which was qualified by further Notification dated July 24, 1968, and the advantage of the two notifications should be given to the petitioners. The petitioners also claimed that for determining the assessable value under Section 4 of the Act, the cost incurred in respect of post-manufacturing operations should be excluded and after exclusion of such cost if the price of the product falls below Rs. 5/- then advantage of the exemption should be granted. The Assistant Collector turned down this contention holding that the petitioners an' the Bata Shoe Co. are independent entities, and therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Mr. Rana submits that the view taken by the Excise Authorities is clearly contrary to the principles enunciated by the Supreme Court in a Judgment reported in 1977 (1) E.L.T. (J 199) = AIR 1973 SC 225 A.K. Roy Anr. v. Voltas Ltd. Mr. Rana submits that the three authorities below have taken merely one factor into consideration in holding that the agreement is not at arms length and that factor is that the entire production of the petitioners is supplied to Bata Shoe Co. with its brand name. The learned Counsel is right in his submission that that factor alone is not sufficient to come to a conclusion that the agreement was not at arms length. In view of the decision of the Supreme Court, it is clear that while determining the question as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, salaries and other charges. The learned Counsel submitted that clause 6 of the agreement, which deals with question of prices, clearly indicates that the petitioners' unit was an independent unit and not an agency of Bata Shoe Co. In answer to this submission, Mr. Dalal also relied upon 4 or 5 circumstances, and submitted that these circumstances do indicate that the agreement was not at arms length. Mr. Dalal submits that the agreement provides that Bata Shoe Co. shall provide not merely an advice and assistance and technical know-how and supervision to the petitioners unit, but would also provide necessary working capital by way of interest free advances required for operation of the plant, and other working expenses. The agreement fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrive at a finding whether the agreement is at arms length or otherwise. In my judgment, taking an overall view of the matter and the cumulative effect of circumstances pointed out by Mr. Rana on one hand and Mr. Dalal on the other hand, the conclusion is in-escapable that the agreement was not at arms length. 4. The second submission of the learned Counsel is that even if the petitioners are liable to pay excise duty, the petitioners need not pay the same for a period commencing from May 28, 1967 to December 1st, 1967. The Learned Counsel placed reliance upon the notification dated March 1st, 1964 in support of his claim for exemption. The notification was published by the Government of India in exercise of the powers conferred under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption from the payment of excise duty for a period commencing from May 28, 1967 to December 1, 1967 deserves to be rejected and the view taken by the Excise Authorities in that connection appears to be a correct one. 5. The last submission of Mr. Rana deserves to be accepted. The learned Counsel submitted that a duty on footwear costing less than Rs. 5/- was exempted under Notification dated December 1st, 1967 and a further Notification was issued on July 24, 1968 providing that the exemption would operate from May 26, 1967. These two notifications clearly establish that the petitioners are not liable to pay excise duty on footwear costing less than Rs. 5/- manufactured on or after May 26, 1967. Mr. Dalal, the learned Counsel, appearing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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