Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs The Enfield India Ltd. on 20 January, 1988
Equivalent citations: 1988(34)ELT654(TRI-DEL)
JUDGMENT K.L. Rekhi, Member (T)
1. In the first instance, the respondents verified the outward register of the Collector (Appeals) and stated that they were satisfied that the Appellate Collector received the impugned order-in-appeal on 4.3.1986 and the appeal was, therefore, in time. As regards one day's delay in submission of the respondent's cross objection, the Learned Representative of the Department stated that he had no objection to the delay being condoned. We condoned the delay and took the cross objection on record. The hearing on merits of the appeal then started.
2. The dispute in this appeal is on the question of exclusion of dealer's margin of Rs. 260/- per Motor Cycle. The period involved is from 4.1.1984 to 21.9.1984.
3. During the material period the respondents disposed of their "SILVER PLUS" Motor Cycles through the following three channels :-
(i) 32.5% sold direct to customers through agents or authorised representatives.
(ii) 27.4% sold to M/s. Enfield Sales Ltd., for re-sale in Tamil Nadu State only.
(iii) Rest 20.1% sold to dealers, numbering about 150 to 200, throughout India outside the State of Tamil Nadu.
The respondents admitted that M/s. Enfield Sales Ltd. were a 'related person' of theirs. They maintained that 52.5% of the sales made direct to customers (actual users or consumers) were retail sales in view of the Tribunal's Order reported at 1988 (33) ELT 147 - M/s. Escorts Ltd. Their plea was that the remaining 20.1% sales satisfied the definition of the normal price Under Section 4(l)(a) of the Central Excises and Salt Act, 1944 and assessment should be based on that price, resort to Section 4(1)(b) and the Valuation rules being unnecessary.
The respondents had also no quarrel with the proposition that the authorised representatives through whom direct sales to customers were made functioned as agents of the respondents.
4. The Learned Representative of the Department pleaded that 52.5% sales direct to customers constituted the majority of the sales, these were wholesale sales and, therefore, the majority sale price, which also included the dealer's margin or agent's commission of Rs. 260/-, should constitute the assessable value. The agent's commission was not a trade discount and hence not deductible Under Section 4, vide 1984 (17) ELT 607 (SC) - M/s. Coromendal Fertilisers Ltd.
5. We have given the matter our earnest consideration. Sale of one-one Motor-Cycle to direct users in the public cannot be called a wholesale sale. It was a retail sale, as already held by this Tribunal in the case of M/s. Escorts Ltd. aforesaid. Before a resort is made to the retail price, we have to see whether some other basis of assessment, which in law has precedence over retail price assessment under the Valuation Rules, is available or not. We find that there were two sets of wholesale sales available in this case. The first was to M/s. Enfield Sales Ltd. They were admittedly a 'related person' of the respondents, and, therefore, the respondent's sale price to them was not acceptable. The other set of wholesale sales was to about 150 -200 dealers all over India outside Tamil Nadu. The Department has not shown us anything wrong with these sales except saying that they constituted the minority sales. But 20.1% is not an insignificant quantity. Even though it was the minority sale, it becomes important because the rest of the sales were either retail sales or they were sales made to a 'related person'. There is nothing to show that if the dealers outside Tamil Nadu wanted to buy more Motor-Cycles, larger quantities would not have been available to them. We hold that these 20.1% sales were bona fide sales and they were made in the normal course of wholesale trade. They satisfied all the conditions of 'normal price' Under Section 4(1)(a). Accordingly, the price charged by the respondents from these dealers should constitute the basis of valuation for all the Motor Cycles removed from the respondents' factory during the material period. There is no need to resort to the Valuation Rules for working out the assessable value.
In the result, we dispose of the appeal as well as the cross objection in the above terms. The Assistant Collector shall re-determine the assessable values in accordance with this order and give consequential relief to the appellants.