TMI Blog1985 (7) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... o 14-11-1969. 90 per cent of the production was sold to Messrs Philips India Ltd. at the rate of Rs. 265, Rs. 308 and Rs. 348, for water heaters having a capacity of 25, 35 and 45 litres respectively. The remaining 10 per cent of the production was sold to retailers at the rate of Rs. 340-45, Rs. 394-36 and Rs. 444-36. At one stage, the first respondent had approved the price list at the rates at which goods were sold to the retailers. However, the Deputy Collector later on by order dated 3-1-1970 changed these rates to Rs. 386-75, Rs. 446-25 and Rs. 501-50. The manufacturer-appellant had already appealed against the wholesale cash price being fixed at Rs. 340-45, Rs. 394-36 and Rs. 444-36. It also changed the wholesale prices later on fixe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puty Collector. A revision petition filed by the appellant came to be dismissed without any consideration of the merits of the claim of the appellant. 6. When the appellant came to this court by a writ petition questioning the validity of the orders passed by the Excise authorities, the learned Judge also confirmed the findings of the Excise authorities that Messrs Philips India Ltd. were favoured buyers getting the goods at a discount. The reason given by the learned Judge for this conclusion was that the goods were given to Messrs Philips India Ltd. at a lower price as they were buying large quantities. The order of the learned Judge does not disclose any other reason for coming to the conclusion that Messrs Philips India Ltd. were fav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilities to excise duties for the period 1-3-1969 to 14-11-1969, admittedly neither clause (a) nor (b) of Sec. 4 as it then was contained any concept of 'related person'. Even under the amended proviso the concept of 'related person' is a very narrow concept and sales which are made in the course of normal commercial dealings and at arms length are not hit by Sec. 4(4)(c) of the Act. 9. When the definition of 'related person' was challenged before the Supreme Court in Union of India and others etc. v. Bombay Tyre International Ltd. etc., 1983 E.L.T. 1896, the Supreme Court took the view that the provision in the definition of 'related person' relating to a distributor can be legitimately read down and its validity thus upheld. In paragrap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate entity was used for tax evasion or to circumvent tax obligation." 10. Therefore, even under the amended provision of Sec. 4, the concept of 'related person' has been given a very narrow meaning. It is nobody's case that Messrs Philips India Ltd. are a corporate entity which is only a facade for the activities of the manufacturer. 11. In Amar Dye Chem Ltd. and another v. Union of India, and another, 1981 E.L.T. 384 (Bom.), a Division Bench of the Bombay High Court took the view that in the case of buyer who purchases goods on payment of a commercial price to the manufacturer and transaction in effect is a sale, such a buyer even though a kind of distributor is different from the distributor who acts as an agent of or on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be a sale and the price at which the sale is effected must be treated as wholesale cash price. 15. If the transactions entered into by the manufacturer with Messrs Philips India Ltd. are considered in a commercial perspective, it is obvious that the appellant instead of finding out a large number of wholesale, dealers, has found one wholesaler who was prepared to lift 90 per cent of its production. If under these circumstances, it had charged a lower price for its product than what it does to retailers, we fail to see how the sale to Messrs Philips India Ltd. cannot be considered as a sale at a commercial price. 16. It is also difficult to appreciate how merely because the product was being advertised by the wholesaler and the wholes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facturer to dispose of large part of the stock only to one wholesaler and if in consideration of having lifted large part of the stock a lesser wholesale price is charged, the buyer does not merely on that account become a favoured buyer. The price which is a commercial price, must, therefore, be necessarily regarded as wholesale cash price for the purpose of Sec. 4. In our view, the order of the learned Judge dimissing the petition is "also liable to be set aside. 17. We accordingly allow the appeal, set aside the order of the learned Judge, allow the writ petition and hold that the appellant was entitled for the period 1-3-1969 to 14-11-1969 to Rs. 265, Rs. 308 and Rs. 348 determined as wholesale cash price in respect of the water heat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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