TMI Blog1977 (1) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... ional Sales Offices. 2. The petitioner is well-known Tata Engineering and Locomotive Company Limited, a company registered under the Indian Companies Act, having its factory at Jamshedpur for manufacturing commercial motor vehicles and carrying on business. The petitioner sells vehicles to its dealers. Government, State Transport Undertakings, the Director General of Supplies and Disposals including Army and various industrial units as well as a few miscellaneous parties (customers). The petitioner also clears vehicles for sale to its various Regional Sales Offices with which we are concerned in this writ petition. Section 3 of the Act provides for levy and collection of excise duty, in such manner as may be prescribed on all excisable goods which are produced or manufactured in India at the rates set forth in the First Schedule, to the Act. In accordance with the rates set forth in the First Schedule, excise duty on the motor vehicles manufactured by the petitioner company is payable at the rate of twelve and half per cent. ad valorem as mentioned under Item No. 34. Section 4 of the Act as amended and in force from the 1st October, 1975 provides for valuation of the excisable g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as defined under S.4 (3)(c) of the Act, and, therefore, the despatch to the Regional Sales Offices should be assessed at the normal price ex-work at Jamshedpur, as are applicable for dealers and other classes of buyers, like the Government etc., for whom the clearance is directly made from the factory. The petitioner, on the same date, also wrote a letter to respondent No. 3 to the effect that respondent No. 2 was not correct in treating the sales through the Regional Sales Offices as sales through related person . By a letter dated the 30th September, 1975, the petitioner also explained to the authorities concerned as to what are the post-manufacturing expenses, which are sought to be deducted from the price of vehicles delivered at various Regional Sales Offices (Annexure 6). They being transport charges to Regional Sales Offices and interest charges from the date the vehicles leave the works up-to-date of sale and selling expenses etc., could not be subject to excise duty. The price list in respect of sales from the Regional Sales Offices may be treated for information only. On the 15th October, 1975 the petitioner without prejudice to its right prayed for a month s time (An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vehicles under the circumstances from the factory to the Regional Sales Offices attracts Section 4(2) of the Act and as such only cost of transport is to be deducted from the price at which the vehicles are sold by the Regional Sales Offices. 7. In view of the admission made by the respondents in the counter affidavit, which has also been supported in course of argument on behalf of the respondents, the Regional Sales Offices of the petitioner cannot be treated as related person . On the concession made, Annexure 2 , asking the petitioner to submit price lists in respect of different Regional Sales Offices in Part IV of the Proforma relating to sales to or through the related person, must be quashed. 8. Mr. Joshi, learned Counsel for the petitioner, has submitted that excise duty is leviable only on manufacturing cost and manufacturing profit, and, therefore, the price to be charged by the manufacturer for the sale of wholesale goods could represent the real value for the assessment of excise duty and post manufacturing operation cannot be taken into account for purposes of levy of excise duty. Learned counsel has relied on two decisions of the Supreme Court, namely, the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of wholesale trade except to or through a related person, the normal price of the goods sold by the assessee to or through such related person shall be deemed to be the price at which they are ordinarily sold by the related person in the course of wholesale trade at the time of removal, to dealers (not being related persons) or where such goods are not sold to such dealers, to dealers (being related persons) who sell such goods in retail. (b) | | | | | Where the normal price of such goods is not ascertainable equivalent thereof determined in such manner as may be prescribed. (2) | | | | | | Where, in relation to any excisable goods the price thereof for delivery at the place of removal is not known and the value thereof is determined with reference to the price for delivery at a place other than the place of removal, the cost of transportation from the place of removal to the place of delivery shall be excluded from such price. (3) | | | | The provisions of this section shall not apply in respect of any excisable goods for which a tariff value has been fixed under sub-section (2) of Section 3 . Sub-section (4) defines assessee , place of rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enting the manufacturing cost plus the manufacturing profit and excludes post-manufacturing operation, namely, selling profit. The Section postulates that the wholesale price should be taken on the basis of cash payment thus eliminating the interest involved in wholesale price which gives credit to the wholesale buyer for a period of time and that the price has to be fixed for delivery at the factory gate thereby eliminating freight, octroi and other charges involved in the transport of the articles. * * * * ....... for a wholesale market to exist, it is necessary that there should be market in the physical sense of the term where articles of a like kind or quality are or could be sold or that the articles should be sold to so-called independent buyers. Even if it is assumed that the latter part of section 4(a) proceeds on the assumption that the former part will apply only if there is a wholesale market at the place of manufacture for articles of a like kind and quality, the question is what exactly is the concept of wholesale market in the context. A wholesale market does not always mean that there should be an actual place where articles are so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacturing operation. The price charged by the manufacturer for sale of the goods in wholesale would, therefore, represent the real value of the goods for the purpose of assessment of excise duty. If the price charged by the wholesale dealer who purchases the goods from the manufacturer and sells them in wholesale to another dealer were taken as the value of the goods, it would include not only the manufacturing cost and manufacturing profit of the manufacturer but also the wholesale dealer s selling cost and selling profit and that would be wholly incompatible with the nature of excise. It may be noted that wholesale market in a particular type of goods may be in several tiers and the goods may reach the consumer after a series of wholesale transactions . 11. Judged in the background of the decisions, the provisions of amended S. 4 have to be construed. Section 4(1)(a) lays down that the normal price will be the price at which the goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the assessee and the buyer have no interest, directly or indirectly, in the business of each other and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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