9911796707
TMI Blog1988 (4) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... turn of the writ made by the High Court, and upon hearing the arguments of Mr. S. Ramalingam, Advocate for the petitioner, and of Mr. T. Somasundaram, Additional Central Govt. Standing Counsel for the respondents, the Court made the following order :- 2. The matter arises under the Central Excises and Salt Act 1 of 1944, hereinafter referred to as the Act. The first respondent in respect of electric fluorescent lighting tubes manufactured by the petitioner and sold on wholesale basis to M/s. General Electric Company of India (P) Ltd., Calcutta, hereinafter referred to as the Company, held that the price of such sales could not be taken to be the 'wholesale cash price' within the meaning of Section 4(a) of the Act as the section stood prio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with duty from the factory or other premises aforesaid." It is made clear that whenever Section 4 or clause (a) thereof is referred to in this order, the reference is only to that provision prior to its substitution with effect from 1-10-1975. On this basis, there was a demand on the petitioner of duty under the Act. The petitioner took up the matter by way of an appeal to the second-respondent and there was no success before the second-respondent and this obliged the petitioner to go by way of a revision to the third respondent and that revision has also been dismissed. The orders of respondents 1 to 3 are being put in issue in this Writ Petition. 2. The short point that arises for consideration on the submissions made by Mr. S. Ramali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of Section 4(a) of the Act if the agreements were made at arms length and in the usual course of business. 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 those sales would not be the 'wholesale cash price' for levying excise under Section 4(a) for the Act. A sole distributor might or might not be a favoured buyer according to terms of the agreement with him are fair and reasonable and were arrived at on purely commercial basis. Once wholesale dealings at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of extra-commercial considerations, e.g., he is a relative of the manufacturer, the price charged for those sales would not be 'wholesale cash price' for levying excise under Section 4(a) of the Act; (v) A sole distributor might or might not be a favoured buyer according as terms of the agreement with him are fair and reasonable and were arrived at on purely commercial basis; (v) Once wholesale dealings at arms length are established, the determination of 'wholesale cash price' for the purpose of Section 4(a) of the Act may not depend upon the number of such wholesale dealings; (vi) The fact that the manufacturer sold 90 to 95 per cent of the articles manufactured to consumers direct would not make the price of the wholesale sales of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because they were motivated by extra-commercial considerations and do not reflect the fair and reasonable price. Merely because the manufacturer entered into agreements with wholesale dealers, stipulating for commercial advantages, we cannot eschew the prices stipulated as not representing the 'wholesale cash price'. The ultimate test is to find out as to whether the price stipulated is fair and reasonable. Conferment of certain extra-commercial advantages would not militate against the price being fair and reasonable. The fact that the wholesale dealer have to sell at a higher price need not necessarily be a factor to be taken note of to frown upon the price arrived at under the agreement between the manufacturer and the wholesale dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisive on the point as to whether the price stipulated was fair and reasonable arrived at on purely commercial basis which could be called the wholesale cash price for Section 4(a) of the Act. Respondents 1 to 3 have not adverted to the question as to whether specially low prices have been charged, because of extra-commercial consideration. In my view, there has been a wrong approach by respondents 1 to 3 to the question in issue, and in the interests of justice, the matter requires re-investigation, review and re-adjudication by the first authority, namely, the first-respondent, who can appropriately deal with the matter, taking note of and applying the principles discussed above. Accordingly, the orders of respondents 1 to 3 impugned i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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