1993 (1) TMI 151 - AT - Central Excise

Summary

Issues Involved:
1. Determination of assessable value under Section 4 of the Central Excises and Salt Act, 1944.
2. Principal to principal basis of sale.
3. Mutuality of interest among the parties.
4. Inclusion of freight and packing charges in the assessable value.
5. Validity of the agreement between the parties.

Issue-wise Detailed Analysis:

1. Determination of Assessable Value under Section 4 of the Central Excises and Salt Act, 1944:
The main issue was whether the prices declared by the appellants in their price lists should be modified and the prices charged by M/s. All Seasons Foods Ltd. in the wholesale trade should be taken as the assessable value under Section 4. It was held that the prices charged by All Seasons in the course of wholesale trade are required to be taken for determining the assessable value under Section 4 for the purpose of assessment of Central Excise duty.

2. Principal to Principal Basis of Sale:
The agreement stipulated that the sale was on a principal to principal basis on a wholesale ex-factory cash price. However, the Assistant Collector and Collector (Appeals) held that the agreement's conditions, such as joint determination of prices and mutual interest in the business, did not support a principal to principal basis. The Tribunal concluded that the arrangement could not be regarded as a sale of goods at a price ordinarily sold in the course of wholesale trade.

3. Mutuality of Interest Among the Parties:
The authorities held that the agreement between Anand Foods and All Seasons indicated mutuality of interest, which was further confirmed by clauses in the agreement regarding joint determination of prices, quality control, and sharing of expenses for defective goods. The Tribunal found that the stipulation about joint determination of prices went beyond the normal concept of ordinary sale of goods in the course of wholesale trade, thereby indicating mutuality of interest.

4. Inclusion of Freight and Packing Charges in the Assessable Value:
The Assistant Collector held that the freight charges for transporting goods from Nasik to Bombay and the cost of packing materials were not included in the declared price. The Tribunal agreed that these charges should be included in the assessable value. The Tribunal also noted that the agreement was silent on packing charges, and the price fixed was exclusive of the packing cost.

5. Validity of the Agreement Between the Parties:
The Tribunal scrutinized the agreement and found several abnormal conditions that led to the conclusion that the prices stipulated in the agreement were not normal. The Tribunal held that extra commercial considerations had entered into the determination of the price, and therefore, the prices could not be accepted for the purpose of assessment of duty under Section 4(l)(a).

Conclusion:
The Tribunal set aside the orders of the lower authorities and remanded the matter to the Assistant Collector for fresh adjudication. The Assistant Collector was directed to take into account permissible deductions such as freight, transit insurance, and the profit of M/s. All Seasons, and to recalculate the assessable value based on the data provided by the appellants.