TMI Blog1984 (10) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... wing : 2. A contract was entered into between the Railways and the petitioner on 19-7-1973-which has been extended from time to time - whereunder the petitioner has undertaken to manufacture and supply sleepers. The contract stipulates that the Railways shall supply MCI inserts, free, to the petitioner, which have to be inserted into the sleepers, at the time of their manufacture. These inserts are meant to hold the rails which are laid over the sleepers. The contract further stipulates that the petitioner shall account for all the MCI inserts supplied to him. It would be appropriate to notice the relevant clauses in the contract. Sub-clauses (1) and (2) of clause 2 of the contract reads as follows : "3.1 The above rate per sleeper sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or fails to supply the sleepers, it has to account for and return the inserts to the Railways. The rate per piece, agreed between the parties, as per clause 3, does not include the value of the inserts supplied by the Railways. 3. In the invoice prepared by the petitioner, only the amount mentioned in clause 3 of the contract is shown, which means, that the value of the inserts, is not included in the invoice value. This procedure was accepted by the Central Excise Authorities, for some time, but, thereafter, they changed their stand, evidenced by their show cause notice dated 10-4-1980. By this show cause notice, the authority called upon the petitioner to show-cause why it should not be made liable for paying the excise duty on the dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excises and Salt Act, 1984 (1 of 1944) and contends that the price mentioned in the invoice is the normal price of the goods, because that is the price at which it, ordinarily, sells the same to the Railways. He submits that the Railways is not a related person within the meaning of Section 4(1)(a) of the Act and further that in this case, the price is the sole consideration for sale. He submits, further, that the transaction between it and the Railways, in this case, represents wholesale trade, within the meaning of Section 4(1)(a) of the Act. The Counsel also relies upon the notification No. 120/75, dated 30-4-1975, in support of his contention. 5. The question arising herein, has to be answered keeping in view, the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the petitioner cannot include their value in the sale bill or invoice, as it may be called. It should also be remembered that the buyer, i.e., Railways, is not a 'related person', as defined in Section 4(l)(a) of the Act and there is no other consideration for the sale, except the price agreed between the parties. For all these circumstances, we are of the opinion that the petitioner was right in contending that the amount mentioned by it in the invoice, is the normal price of the sleepers supplied by it to the Railways, for the purpose of levy of duty under Sections 3 and 4 of the Act. 7. We may, in this connection, refer to a Bench Decision of the Calcutta High Court in Union of India and others v. Free India Dry Accumulators ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttery including the cost of the container and lead acid was fixed. The value of the container and lead acid was also agreed between the parties. It was agreed that the Railway was to supply the containers and lead acid. It was further agreed that the value of the containers and lead acid would be adjusted against the price of the finished product in the form of rebate. It is true that the Railway supplied the containers and lead acid, but not gratis. If the respondent had to purchase the same from the market, it had to incur the same cost as agreed to between the parties. Instead of procuring such containers and lead acid from the market, the respondent got the same from the Railway and had to pay the price of the same which was adjusted as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry, from which a rebate was provided representing the value of the container and lead acid. As a fact also, the bill made out by the manufacturer showed the entire value of the battery and then gave rebate for the value of the containers and lead acid. It is in those circumstances that the said decision was rendered. But, as we have pointed out, in the case before us, the inserts never become the property of the petitioner. They are merely supplied to it, enabling it to insert them into the sleepers at the time of their manufacture, all of which sleepers are to be supplied, exclusively to the Railways. In case of its failure to manufacture or failure to supply the sleepers, the petitioner has to return those inserts to the Railways. As we h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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