1987 (2) TMI 334

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....rom their customer M/s. Camphor & Allied Products Limited was influenced by any extra-commercial consideration. 3. The goods fall under Item 68 of the Central Excise Tariff. By virtue of the exemption Notification No. 120/75-CE, dated 30.4.1975, the goods could be assessed at their invoice value subject to certain conditions. The conditions relevant for our discussion are as follows:- "(iv) the invoice price is not influenced by any commercial, financial or other relationship whether by contract or otherwise between the manufacturer or any person associated in business with the manufacturer and the buyer or any person associated in business with the buyer other than the relationship created by sale of the aforesaid goods; (v) no pa....

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....revious year (i.e., the year in which the deficient quantity ought to have been supplied as per the agreement). (2) The prices charged by the respondents from the customer company (for primary bulk turpentine) and so also the prices charged by the customer company from the respondents (for distilled turpentine) were low as compared to the prices charged from other independent buyers, in some cases less than half. (3) The customer company had to keep security deposit of Rs. 50,000/- with the respondents under the agreement of 1971. The amount of security deposit was increased to Rs. 1 lakh under the agreement of 1979. On the point of comparative prices, the learned representative of the department admitted that due allowances could ....

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....ducts were entered into. The respondents pleaded that the aforesaid three clauses as objected to by the department existed even in their first and second long term agreements, entered into in 1969 and 1971, respectively, long before their product became leviable to excise duty on 1.3.1975. It could not, therefore, be said that they had thought of entering into such agreements for the sake of circumventing a part of the levy. 6. We have given the matter our earnest consideration. We find force in the respondent's pleading. The respondents are an undertaking of the U.P. State Government while the customer company is a commercial limited concern in the private sector. The record does not show any special relationship between the two. The sa....