Customs, Excise and Gold Tribunal - Delhi
Commissioner Of C. Ex. vs Shri Ram Piston And Rings Ltd. on 11 January, 1999
Equivalent citations: 1999(107)ELT380(TRI-DEL)
ORDER A.C.C. Unni, Member (T)
1. This is an appeal filed by the Revenue against the order of Collector (Appeals) Ghaziabad dated 16-12-1994 which set aside the adjudication order of the Additional Collector dated 25-3-1994. Additional Collector had confirmed a differential duty demand of Rs. 38,421.60 apart from imposing penalty of Rs. 5,000/- on the Respondents herein.
2. Respondents are inter alia engaged in the manufacture of Pistons, pins and rings classifiable under sub-heading 8409.00 of the Schedule to Central Excise Act, 1985. They filed price lists. Price list No. 115/88 effective from 25-11-1988 related to purchase of excisable goods by the Association of State Road Transport Undertakings (ASRTU). Price list No. 12/88 effective from 28-1-1988 related to contract for the supply of the same goods to the Maharashtra State Road Transport Corpn. (MSRTC) who were a constituent of ASRTU.
3. Both the price lists were approved in terms of Rule 9B of the Central Excise Rules. Subsequently, from 1989 the price of excisable goods covered by Price list No. 12/88 with MSRTC was revised upwards but no revised P.L. was filed. The Department alleged short payment of duty during the period January 1989 to March, 1989 on the ground that the Price list No. 115/88 relating to ASRTU should be taken as the price list for sale to MSRTC also as MSRTC was a constituent member of ASRTU.
4. The Additional Collector who adjudicated the matter held that since MSRTC is a constituent member of ASRTU and MSRTC will not buy the same goods from ASRTU at one price (which was higher) and at another price (which was lower) from the appellants' factory, and the applicability of the contract with MSRTC cannot be extended beyond the date at which another contract to sell the same goods to the same buyers were entered into. He held that though as per Section, there was no bar to goods being sold at different prices to different classes of buyers, the difference in prices was subject to the condition of their being sold to different classes of buyers. Since in the facts of the case, the buyers remained the same, there cannot be two different prices for the same goods. Additional Collector, therefore, confirmed the differential duty demand and imposed the penalty referred to above.
5. In appeal, the Collector (Appeals) held that the Additional Collector had wrongly confirmed the demand by holding that MSRTC was not a different class of buyer from ASRTU. Setting aside the Additional Collector's order, Collector (Appeals) observed that the findings of the Additional Collector were based merely on the fact that MSRTC was a constituent member of ASRTU. He further observed that once a contract is entered into, both the buyers and the sellers are bound to comply with the conditions laid therein. Since the appellants had paid the duty on the revised higher price as per Price list No. 12/88, which was in accordance with the provisions of Section 4, there can be no allegation that the appellants had collected the price at a higher rate and had not paid the differential duty. He also held that MSRTC and ASRTU were separate classes of buyers.
6. Appearing for the Revenue, Shri S.P. Rao, ld. JDR submitted that it was not disputed by the respondents that MSRTC was a constituent member of ASRTU and the excisable goods bought by ASRTU are for use by MSRTC also. Since, the ASRTU supplied the goods to its constituent at a uniform price, the availability of the earlier contract price with MSRTC cannot be extended beyond the date on which the subsequent contract with ASRTU to sell the same goods had come into force since MSRTC and ASRTU constituted the buyers of the same class. Different prices of the same goods cannot prevail for the purpose of assessment within the same class of buyers. He also referred to the condition in the contract with MSRTC which stated that if the manufacturer offered lower rates or better terms and conditions to the ASRTU or to any other clients in India; then those lower rates and better terms and conditions would ipso-facto become applicable to MSRTC also. This would additionally go to prove that both MSRTC and ASRTU belongs to the same class of buyers.
7. Shri Rajesh Chibber, ld. Advocate appearing for the respondents referred to the cross objections filed by the respondents and submitted that it would be clear from the terms and conditions of the contract with MSRTC that only if lower rates or better terms and conditions are offered to ASRTU or any other clients, such terms would apply to the contract with MSRTC. Though it was not disputed that the rate contract with ASRTU covered by Price list No. 115/88 showed that the rates were higher than the rates executed with MSRTC, since ASRTU had not raised any objection, it was obvious that ASRTU have treated themselves as a different class of buyers even though it was not disputed that MSRTC was a constituent of ASRTU. It was also on record that the respondents received payment for the goods sold to both the buyers separately. Therefore the findings of the Collector (Appeals) that the two parties were separate class of buyers and therefore, no duty differential arose, may be upheld.
8. We have considered the submissions made from both the sides. We find that the respondents had filed two separate price lists relating to two different buyers pursuant to two separate agreements with them. The price lists had been approved. The argument raised on behalf of the Revenue is that since MSRTC is a constituent member of ASRTU and ASRTU supplies the goods to all its constituents at a uniform price; the availability of the contract with MSRTC cannot extend beyond the date on which a subsequent contract to sell the same goods to ASRTU at a higher price came into existence. This does not appear to be borne out by the facts placed before us. It is not in dispute that the respondents have received payments separately from the two buyers at the different rates agreed upon in two different contracts. The mere fact that MSRTC was a constituent member of ASRTU would not by itself make them indivisible from the ASRTU. Department has relied on the provision in the contract with MSRTC providing for parity of treatment where lower rate or better terms and conditions are offered to ASRTU or any other client in India. However, no corresponding clause existed in the contract with ASRTU. In our view, the absence of a similar clause in the contract with ASRTU, lends greater acceptability to the Respondents' contention that the two buyers themselves have accepted the position that they are two different classes of buyers. The mere fact that MSRTC is a constituent member of ASRTU does not, in our view, alter this position. In the commercial world contracts a sale and purchase are entered into by parties on considerations of mutual advantage. Each contract is governed by its own terms and is therefore, considered to constitute its own independent regime. The fact that the buyer in Contract 'A' also happens to be a constituent member of an Association who is the buyer in Contract 'B' will not by itself transform the buyers of Contract 'A' and buyers in Contract 'B' into one 'class of buyers' even in cases where the seller as well as the goods are the same. Proviso (i) to Section 4(1)(a) clearly recognises the possibility of different classes of buyers and different prices. The contention of the Revenue that the contract with the MSRTC cannot be extended beyond the date on which the contract with ASRTU was concluded is not supported by any material to show that the parties to the contracts have treated them so. In Annexure V of the Memo of Appeal appellants have shown the details of the payments received by them from MSRTC for clearances covered by GP 1s in January, 1989. This further proves that MSRTC had continued to treat themselves" as a different class of buyers from ASRTU. The Department has, on the other hand, failed to show any material to substantiate the claim that ASRTU has been supplying the goods at a uniform price to all its constituents.
9. Having regard to the above discussion, we find no merit in this appeal and the same is rejected. The cross objections filed by the respondents are also disposed of in the above terms.