Customs, Excise and Gold Tribunal - Delhi
Vibgyor Chemicals vs Collector Of Central Excise on 15 September, 1997
Equivalent citations: 1997(96)ELT320(TRI-DEL)
ORDER
U.L. Bhat, President
1. Appellant is absent in spite of notice of hearing but has sent a request for decision of the appeal on merits. We have heard Shri M. Ali, JDR and perused the papers.
2. Appellant, engaged in the manufacture of paints and varnishes, filed price lists in Part I and on approval of the same cleared goods on payment of appropriate duty on the approved prices. Subsequently it was found that sales were effected only to two concerns, M/s. United Sales Agencies (for short, USA) and M/s. Lakshmi Stores, that discount of 15% was given to the former and discount of 10% was given to the latter and the former was "related to the appellant". On this basis show cause notice was issued proposing demand of differential duty to be paid on the differential discount of 5% which was not allowable on account of the relationship. Appellant resisted the notice contending that the appellant had declared different rates of discount depending on the value of purchases and 15% and 10% was given only on that basis. Appellant also denied relationship between the two concerns as alleged in the show cause notice. It appears that three partners of the USA are the wives of the three partners of the appellant. The Assistant Collector found this to be sufficient ground to hold that the supplier was related to the manufacturer. On this ground he confirmed the demand proposed. The Collector (Appeals) declined to interfere. Hence the present appeal.
3. If relationship of the nature contemplated in Section 4(4)(c) of the Central Excise Act, 1944 is established, it may be open to invoke proviso (3) of Section 4(1) of the Act and determine the assessable value at the price at which the "related person" effects sales to dealers. However, this provision was not invoked either in the show cause notice or in the impugned orders. Therefore, it really does not matter whether the two parties are to be treated as related or not. It appears to us that the department could have considered whether USA could be treated as a favoured buyer but this was not done.
4. Price lists themselves show that the appellant had declared different rates depending on the value of purchases made by the buyers. 15% was payable as discount in regard to transactions above the value of Rs. 30,000/-. It was on this basis that the higher discount was granted to USA. The department had no case .even though the value of purchases by USA was much less than this limit. Higher discount was granted to USA. Differential discount can be validly given on the basis of the quantity or value of clearances. This legal principle was ignored by the lower authorities.
5. For the reasons indicated above, we set aside the impugned orders and allow the appeal.