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TMI Blog1987 (4) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 4(a) of the Act as the section stood prior to 1-10-1975, and he held that the excisable value of such tubes could be only at the rates at which they were in turn sold by the company. Section 4 of the Act, prior to its substitution with effect from 1-10-1975 read as follows : "Where under this Act, any article is chargeable with duty at a rate dependent on the value of the article, such value shall be deemed to be :- (a) the 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 the place of manufacture or production, or if a wholesale m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation on the submissions made by Mr. S. Ramalingam, learned counsel for the petitioner, is as to whether the prices at which the tubes were sold by the petitioner on the wholesale basis to the company should be taken as the wholesale cash price under Section 4(a) of the Act. Respondents 1 to 3 have heavily relied on the agreement entered into between the petitioner and the company on 9-9-1968 to say that the agreement was not entered into at arms length, and hence the wholesale price of the transactions between the petitioner and the company could not be taken to be the wholesale cash price. The pronouncement of the Supreme Court in A.K. Roy v. Voltas Ltd. 1977 E.L.T. (J177) = (AIR 1973 S.C. 225) has discussed the question as to when an agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial basis. Once wholesale dealings at arms length are established, the determination of the 'wholesale cash price' for the purpose of Section 4(a) of the Act may not depend upon the number of such wholesale dealings. The fact that the appellant sold 90 to 95 per cent of the articles manufactured to consumers direct would not make the price of the wholesale sales of the rest of the articles any the less the 'wholesale cash price' for the purpose of Section 4(a), even if these sales were made pursuant to agreement stipulating for certain commercial advantages, provided the agreement were entered into at arms length and in the ordinary course of business." The principles stated above, if they can be put as heads of tests, may be done as foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the price of the wholesale sales of the rest of the articles any the less the 'wholesale cash price' for the purpose of Section 4(a), even if these sales were made pursuant to agreements stipulating for certain commercial advantages. Excise is a tax on the production and manufacture of goods and Section 4 of the Act provides for arriving at the real value of such goods. When there is a fair and reasonable price stipulated between the manufacturer and the wholesale dealer in respect of the goods purely on commercial basis that should necessarily reflect a dealing in the usual course of business, and it is not possible to characterise it as not arising out of agreement made at arms length. In contrast, if there is a special or a favoured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facturer and the wholesale dealer and to eschew it as not 'wholesale cash price' for levying excise duty under Section 4(a) of the Act. In its subsequent pronouncement in Atic Industries Ltd. v. M.H. Dave, Asstt. Collector of Central Excise and others 1978 E.L.T. (J 444) = (1975) II S.C.W.R. 46, the Supreme Court, stressed upon the aspect of price being fair and reasonable arrived at on purely commercial basis, and the irrelevancy of the price obtained by the wholesale dealer on his sales. The following observations found therein may be extracted : "Moreover, it was not in dispute between the parties that the agreements entered into by the appellants with ICI and Atul were made at arms length and in the usual course of business. It was no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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