TMI Blog1985 (2) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellants charged to the dealers the price of the mopeds sold to them less the amount of ₹ 110/-, ₹ 145/- and ₹ 165/-in respect of different varieties of mopeds. These amounts allowed to the dealers were clearly trade discount liable to be deducted from the price charged to the dealers for the purpose of arriving at the excisable value of the mopeds. Appeal allowed of assessee. - 52/85 - - - Dated:- 26-2-1985 - P.N. Bhagwati and V.B. Eradi, JJ. [Judgment per : P.N Bhagwati, J.].-This appeal by certificate is directed against a judgment of a Division Bench of the High Court of Andhra Pradesh upholding a notice issued by the Assistant Collector of Central Excise, Nellore demanding a sum of Rs. 6,96,177.09 representing the amount of differential duty in respect of Mopeds manufactured by the Appellants and cleared from their Factory during the period from 1st October, 1975 up to 30th April, 1979. The facts giving rise to the present appeal are few and may be briefly stated as follows: 2. The Appellants manufacture Mopeds under the brand names of Suvega Standard, Suvega Deluxe and Suvega Samrat. These Mopeds manufactured by the Appellants are liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t through bank immediately on presentation by Bankers, the dealer shall be liable to the Company for all damages/losses and expenses incurred in this connection and the same will be recovered from the deposit lying with the company. (b) The dispatches by the company will be insured by the dealer against all risks, pilferage, non-delivery and SRCC including breakage, wherever applicable from the time of leaving of the company's factory or stockyard until arrival at dealer's premises, and all such expenditure incidental to transit shall be to the account if the dealer. 6. The dealer shall at his own expenditure maintain such organisation for the sale and service of the said vehicles, including showrooms, service stations, repair shops, parts, storerooms, salesmen, etc. The dealer shall train mechanics at their own cost with the Company. The dealer shall give three free services to every vehicle sold by him and the company shall reimburse to the dealer at Rs. 4/- per each free service rendered by him." The rest of the clauses of the agreement are not relevant but it might be useful to refer to sub-clauses (a) and (b) of Clause 10(iii) which provide as follows: "10 (iii) (a) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied. 4. The Writ Petition filed by the appellants came to be heard by a Division Bench of the High Court of Andhra Pradesh. Though it is difficult to ascertain what exactly was the view taken by the Division Bench, it appears that they came to the conclusion that the dealers were related persons vis-a-vis the appellants and "the discount of Rs. 110/-, 145/- and 165/- for the different varieties of mopeds" was being given for organising sale and providing facilities and this was clearly an example of the mutual interest which the related persons and the appellants are having in the business of each other. The Division Bench, if seems, mixed up two different points, one relating to the question whether the dealers are related persons and the other relating to the question whether the commission of Rs. 110/-, Rs. 145/- and Rs.145/- allowed in respect of different varieties of mopeds to the dealers could be regarded as a trade discount or not. The ultimate decision however, was that the commission of Rs. 110/-, Rs. 145/- and Rs. 165/- in respect of different varieties of mopeds was not trade discount and, therefore, in any event, it was not liable to be deducted from the price char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst part of the definition in sub-section (4)(c) of Section 4. It was contended on behalf of the Department that the dealers were so associated with the appellants that they had interest directly or indirectly in the business of each other. Now this part of the definition also came up for consideration before this Court in another decision namely, Union of India v. Atic Industries Ltd.- 1984 (17) E.L.T. 323 (S.C.)=AIR 1984 S.C. 1495 and the Court pointed in that case : "What the first part of the definition requires is that the person who is sought to be branded as a 'related person' must be a person who is so associated with the assessee that they have interest, directly or indirectly, in the business of each other. It is not enough that the assessee has an interest, direct or indirect, in the business of the person alleged to be a related person nor is it enough that the person alleged to be a related person has an Interest, direct or indirect, in the business of the assessee. It is essential to attract the applicability of the first part of the definition that the assessee and the person alleged to be a related person must have interest, direct or indirect, in the business of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion, namely, whether the Division Bench was right in taking the view that the commission of Rs. 110/-, Rs. 145/-and Rs. 165/- per moped in respect of different varieties of mopeds sold to the dealers could not be said to be trade discount. Mr. Nariman, Learned Counsel appearing on behalf of the appellants, contended that this Commission allowed to the dealers was clearly trade discount and was, therefore, liable to be deducted in determining the excisable value of the mopeds by reasons of sub-section (b) (ii) of Section 4 of the Act. Now it is true that this amount allowed to the dealers has been referred to in the agreement as commission but the level given by the parties cannot be determinative because it is, for the court to decide whether the amount is trade discount or not, whatever be the name given to it. If we look at the terms of the agreement, it is clear that the agreement was between the appellants and the dealers on principal to principal basis. The clauses of the agreement which we have set out above clearly show beyond doubt that under the agreement, the mopeds were sold by the appellants to the dealers and the dealers did not act as agents of the appellants for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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