Bombay High Court
Two Star And Others vs Union Of India And Others on 1 January, 1800
Equivalent citations: 1980(6)ELT166(BOM)
ORDER
1. The 1st petitioner is a partnership firm carrying on business of manufacturing and selling various electrical appliances. The petitioner are manufacturers of electrical gods including the geysers since last several years. The petitioners paid the excise duty o the said manufacture according to be provision of the Central Excises nd SAlt Act, 1944. The petitioners entered into an agreement with messrs. Bajaj Electrical Limited for supply the heaters with brand name "Bajaj". The price was also settled and it was provided that the price would be subject to review from the time to time depending on the market conditions,. The petitioners agreed to provide facility for testing of geysers before leaving the factory and the guarantee for a period of 12 of months was also given. The petitioners agreed to reimburse M/s. Bajaj Electrical Limited for any damages or los suffered due to defective manufacture.
2. In pursuance of this agreement, the petitioners supplied the water heater to M/s. Bajaj Electrical Limited from 1973 onward. It is not in dispute that the factory where the water heaters are manufactured is completely owned by the petitioners and M/s. Bajaj Electrical Limited have no control over the labour or the mode or manner in which the factory is run. The petitioners filed a price list on February 26, 1973 and it was approved. Thereafter price lists wear filed from time to time and thy were approved till March 1974.
3. The Central Excise Collectorate Published a trade notice on March 22, 1974 giving instructions regarding customers getting the goods manufactured with their brand names. In pursuance of this trade notice, the petitioners were served with the show cause notice dated October 21, 1974. by the Superintendent of Central Excise. By this show cause notice the petitioners were informed that the prices of M/s. Bajaj Electricals Limited would be taken as assessable value for the assessment of Central Excise duty in regard to the manufacture of water heater. The show cause notice stated that the goods manufactured by the petitioners bear the name plate of M/s. Bajaj Electricals Limited and, therefore, the prices charged by M/s. Bajaj Electricals Limited to its customers would be the assessable value. Another show cause annexed as Exhibits "F" and "J" to the petition the petitioner gave their reply but by orders dated January 1, 1975 and April 1, 1975 annexed as the Exhibits "H" and "L" to the petition, the show, and cause notices were confirmed. The petitioners preferred appeal against those order but the appellate were issued detaining the goods of the petitioners till the payment of the excise duty and those detention memos are annexed as Exhibit "O" and "P" to the petition. The two orders nd the two detention memos are under challenge in this petition.
4. Mr. Bhatt, the learned counsel appearing in support of the petition submitted that the prices at which the water heater are sold to M/s. Bajaj Electricals Limited were the real value at the time of removal from the factory and therefore, should be have been accepted as a wholesale cash price. The learned counsel submitted that the goods were sold to the company under the agreement which is at arms length. Mr. Bhatt further submitted that the mere fact that the goods were manufactured with the brand name of the M/s. "Bajaj" would not lead to the conclusion that the M/s. Bajaj Electricals Limited are the manufacturers and the prices charged by the Company to its customers should be the assessable value under section 4 of the Central Excise and Salt Act, 1944 Mr. Bhatt submitted that both the orders under challenge give only one reasons for the confirming the show cause notices. the reasons being that the petitioners are manufacturers of the water heaters with the brand name of the "Bajaj" . In my judgment the submission of the learned counsel is sound and requires to be upheld. It is show that mere use of the brand name would not lead to the conclusion that M/s. Bajaj Electricals Limited are the manufacturers of water beaters. supply is exclusively made to the company and the manufactured goods are supply in the with the brand name are not sufficient. The Gujarat High Court an the case of Cibatual Ltd. vs. Union of India and other reported in 1978 Excise Law Tinnes (J 68) and Patna High Court in the case of Bata India Ltd. vs. The Assistant Collector of the Central Excise, reported in 1978ELT (J 21) has held that only because brand name of the company was affixed to the goods would not make the buyer the manufacturers. These two decisions were approved by me in Miscellaneous Petitioner no. 729 of 1974 decided on July 20, 1979, 1980 E. L. T. 1 (Bom) In view of these judgment the finding of the Superintendent of the Central Excise that the M/s. Bajaj Electricals Limited was the manufacturer and the price charged by the Company should be taken into account and to determine the excise duty is clearly erroneous and those two orders dated January 1, 1975 and April 1, 1975 are required to be quashed. As the two orders stand quashed, consequently the detention memos must also fail.
5. Mr. Dalal, the learned counsel appearing on behalf of the department pointed out that the in this petition, the petitioners have challenged the two orders which are subsequent to the period of agreement dated July 19, 1973 and the decision of this petition should not conclude the claim, if any, prior to the period of agreement. The submission is correct. Mr. Dalal also submitted that the against the impugned orders, the petitioners have preferred appeals and they are not yet disposed of. One fails to appreciate why the appeals were not heard for a period of more than 4 of the year. In any event, as the impugned orders are clearly erroneous and contrary to the principles settled by the Supreme Court and the High Courts. I am not inclined to deprive the petitioners of relief in these proceedings is correct and in fact the petitioners have not claimed any relief in respect of these refund application in the present petition. The application for refund filed by the petitioners and which will be filed hereafter should be disposed of in the light of the provision of the law in existence.
6. In the circumstance the petition succeeds and the two impugned orders dated January 1, 1975 and April 1, 1975 annexed an Exhibit "H" and "L" and the two detention memos dated July 16, 1975 and July, 1975 annexed as Exhibits 'O" and "P" are quashed and set aside. In Bank guarantee furnished by the petitioners should stand discharged.