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TMI Blog1987 (2) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... Products Limited was influenced by any extra-commercial consideration. 3. The goods fall under Item 68 of the Central Excise Tariff. By virtue of the exemption Notification No. 120/75-CE, dated 30.4.1975, the goods could be assessed at their invoice value subject to certain conditions. The conditions relevant for our discussion are as follows:- "(iv) the invoice price is not influenced by any commercial, financial or other relationship whether by contract or otherwise between the manufacturer or any person associated in business with the manufacturer and the buyer or any person associated in business with the buyer other than the relationship created by sale of the aforesaid goods; (v) no part of the proceeds of the subsequent sale, use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uantity ought to have been supplied as per the agreement). (2) The prices charged by the respondents from the customer company (for primary bulk turpentine) and so also the prices charged by the customer company from the respondents (for distilled turpentine) were low as compared to the prices charged from other independent buyers, in some cases less than half. (3) The customer company had to keep security deposit of Rs. 50,000/- with the respondents under the agreement of 1971. The amount of security deposit was increased to Rs. 1 lakh under the agreement of 1979. On the point of comparative prices, the learned representative of the department admitted that due allowances could be made because of the fact that the respondents supplied p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resaid three clauses as objected to by the department existed even in their first and second long term agreements, entered into in 1969 and 1971, respectively, long before their product became leviable to excise duty on 1.3.1975. It could not, therefore, be said that they had thought of entering into such agreements for the sake of circumventing a part of the levy. 6. We have given the matter our earnest consideration. We find force in the respondent's pleading. The respondents are an undertaking of the U.P. State Government while the customer company is a commercial limited concern in the private sector. The record does not show any special relationship between the two. The sale of primary bulk turpentine does not cease to be at arm's len ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een the two sets of prices went on widening. It is quite probable that likely future changes in pricing factors could not be foreseen at the time of entering into the agreements. But since the agreements were long term contracts, valid for 4 to 5 years, the agreed prices had to be adhered to. But it cannot follow from this that the agreed price was not the sole consideration for the sale or that the agreed price was influenced by any non-commercial relationship. There is also no evidence of any flow back of the subsequent proceeds of primary bulk turpentine to the respondents. Nor could the nominal earnest money taken by the respondents from the customer company for due performance of the contract be said to create a special relationship be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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