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TMI Blog1982 (2) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excises and Salt Act, 1944, (hereinafter referred to as the Act). The excise duty is leviable on an ad valorem basis as a percentage of the value of goods calculable on the cost of manufacture or in legal terminology the assessable value of the goods. lt is also not in dispute that the assessable value has to be arrived at in accordance with the provisions of the Act and rules framed thereunder which gives the basis for making the levy on such value comprised of manufacturing cost and manufacturing profits to be computed in accordance with the rule laid down by the Supreme Court in A.K. Roy v. Voltas Ltd., A.l.R. 1973 S.C. 225=1977 E.L.T. (J 199) and Atic Industries v. H.H. Dave, A.I.R. 1975 S.C. 960=1978 E.L.T. (J 444). 3. The fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. would make the subsequent sale of goods bought from the first petitioner to its dealers. This the respondents seek to do by treating M/s. Philips India Ltd. to be a "related person" within the meaning of section 4(4)(c) of the Act. The petitioners contest this stand and approach of the respondents and assert that the assessable value for the goods manufactured by the petitioner for sale to M/s. Philips India Ltd. has to be priced at which the petitioners have agreed to supply the said goods to M/s. Philips India Ltd. 4. The petitioners contend that if the respondents are permitted to levy excise duty as they are doing, it would amount to levy of sales tax and would cease to be a levy on manufacture, as contemplated by the Act. If a rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e at which M/s. Philips India Ltd. sell the said goods in the wholesale market becomes the "normal price" which determines the assessable value for the purposes of section 4 of the Act. It is disputed that the transaction between the first petitioner and M/s. Philips India Ltd. shows that the sale to M/s. Philips India Ltd. is at arm's length with price as the sole consideration. It is disputed that the first petitioner and M/s. Philips India Ltd. are unconnected with each other. In short, the case of the respondents is that the parties fall within the mischief of the term "related person" and that the parties have interest in the business of each other. The petitioners counter this assertion by contending that the contract between the firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expressions 'holding company' or 'subsidiary company' or a 'relative' (which can only apply to a natural person) or a 'distributor' or a 'sub-distributor' of each other. The only question is whether there is inter se between the first petitioner and M/s. Philips India Ltd. any "interest, directly or indirectly, in the business of each other" proved on the record. There is none. The mere purchase of goods by M/s. Philips India Ltd. from the first petitioner or manufacture of goods by the first petitioner for M/s. Philips India Ltd. does not create inter se interest between the two companies, directly or indirectly in the business of each other. The only interest that M/s. Philips India Ltd. has is to ensure that it gets the goods it has or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that can be placed on Section 4(4)(c) of the Act. If the price at which M/s. Philips India Ltd. sells to its dealers or distributors is taken as the assessable value, the levy may become one in the nature of sales tax in which case the levy, if authorised by the provisions of the Act, would become ultra vires the legislative competence of the Parliament and the provisions would have to be struck down. Therefore, a correct reading of the provisions of the Act is what this court has already dilated upon in Jay Engineering Works Ltd. and another v. Union of India and others, 1981 E.L.T. 284. 9. Learned Counsel for the respondents has raised an interesting point that what has to be found out is the "normal price" in a wholesale transaction in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delivery at the factory gate. Therefore, that price at which the first petitioner sells the goods to M/s. Philips India Ltd. is the only relevant price. 10. In this view of the matter we issue a mandamus to the Assistant Collector and the Superintendent of Central Excise (respondents 2 and 3) to cancel and withdraw their impugned letters dated February 16, 1979 (Annexure G) and March 20, 1979 (Annexure K) and further direct them to approve the price list submitted by the first petitioner without reference to proviso (iii) of section 4(1)(a) read with section 4(4)(c) of the Act and to permit the first petitioner to clear the goods referred to in the agreement dated January 25, 1979 entered into between the first petitioner and M/s. Philip ..... X X X X Extracts X X X X X X X X Extracts X X X X
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