1988 (3) TMI 72 - HC - Central Excise

Wholesalers not deemed related persons under Central Excises and Salt Act. Petitioners granted refund and costs.

The Court ruled in favor of the petitioners, finding that the wholesalers did not meet the criteria to be considered related persons under the Central ... Valuation - Related person Issues involved: Challenge to order requiring submission of price list in proforma Part IV u/s Section 4 of Central Excises and Salt Act.Summary:The petitioners, a private limited company manufacturing rubber hose pipes, challenged an order by the Assistant Collector of Central Excise requiring submission of price list in proforma Part IV. The Appellate Collector upheld this order, leading to the petition under Article 226 of the Constitution of India.To justify the order, the Appellate Collector highlighted that a significant portion of the company's sales were to related persons, constituting about 80% of sales. The interpretation of Section 4 of the Act was crucial in this matter, particularly Proviso (iii) which applies when goods are sold only through related persons.Referring to legal precedents, it was emphasized that the price at which goods are sold to wholesalers is the basis for levying excise duty. The Supreme Court's judgment in Union of India v. Kantilal Chunilal clarified that mere common directorship or relationships between company officials and wholesale dealers do not automatically classify the dealers as related persons under the Act.The Court ruled in favor of the petitioners, stating that the wholesalers, being partnership firms, did not meet the criteria to be considered related persons. Consequently, the petition was allowed, and the duty paid by the petitioners was ordered to be refunded. The petitioners were also awarded costs for the legal proceedings.