2001 (1) TMI 504 - AT - Central Excise

Manufacturer's Purchase Orders Deemed Contracts; Tribunal Overturns Decision, Grants Relief

The Tribunal held that purchase orders submitted by the manufacturer could be considered as contracts for assessing different values for different buyers. ... Valuation Issues:Consideration of purchase orders as 'contract price' for approval of price lists in absence of specific contracts with different class of buyers.Analysis:The case involved a dispute regarding the approval of price lists in Part II based on purchase orders without specific contracts with different buyers. The appellant, a manufacturer of Ferro manganese, submitted price lists with different prices for various buyers, supported by purchase orders. The department requested copies of contracts, but the appellant argued that purchase orders were binding contracts for commercial transactions. The adjudicating authority approved the price lists, citing precedents supporting separate prices for different buyers based on rational commercial basis. However, the Commissioner (Appeals) disagreed, stating that the price lists should reflect the ordinary selling price and that approval based on purchase orders as contracts was unnecessary. The appellants appealed to the Tribunal challenging this decision.The Sales Officer for the appellant contended that in the ferro alloys market, purchase orders served as contracts for sales to industrial consumers due to practical considerations and market dynamics. He argued that the Commissioner erred in not considering this issue and that the Commissioner had no jurisdiction to review orders related to value under Section 35E. The Sales Officer disagreed with the Commissioner (Appeals) on the applicability of Section 35E, stating that the provision was in effect.The JDR for Revenue reiterated the reasoning in the impugned order, supporting the Commissioner (Appeals)' decision to disapprove the price lists based on purchase orders.The Tribunal, after considering arguments from both sides and reviewing Section 4(1)(a) of the Central Excises and Salt Act, 1944, concluded that purchase orders submitted by the appellants could be construed as contracts for the purpose of assessing different values for different buyers. Therefore, the Tribunal set aside the Commissioner (Appeals)' order and allowed the appeal, providing consequential relief to the appellants.