Excise valuation on related-person pricing: broad protest covered all payments, making excess duty refundable.

Section 4 of the Central Excises and Salt Act, 1944 requires excisable goods to be valued at the normal wholesale price where the buyer is not a related person and price is the sole consideration. Once the distributors were found not to be related persons, excise duty collected on the higher value based on their resale price became excess levy and was refundable. The protest against payment was read broadly and was not confined to one class of sales, so it covered all payments made on the related-person basis. Rule 233B of the Central Excise Rules, 1944 did not require any special form of protest and did not aid the Revenue.

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Issues: Whether the assessee was entitled to refund of excise duty collected on the footing that its distributors were related persons, and whether the protest covering payment of duty extended to the other categories of sales also.

Analysis: Section 4 of the Central Excises and Salt Act, 1944 treats the normal price as the price at which excisable goods are ordinarily sold to a buyer in wholesale trade where the buyer is not a related person and the price is the sole consideration. Once the distributors were held not to be related persons, duty collected on the higher assessable value based on the distributors' resale price represented excess levy. The protest lodged by the assessee was not confined to one category of sales; on a commonsense reading it covered all payments made on the basis that the distributors were related persons. Rule 233B of the Central Excise Rules, 1944 did not require any particular form of protest and did not assist the Revenue.

Conclusion: The assessee was entitled to refund of the excess excise duty in respect of the disputed sales categories, including retail sales, sales to dealers, sales to State Transport Undertakings, and export clearances.

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