AI Drafter 
TaxTMI 
TaxTMI 
1994 (1) TMI 137
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....otice was issued proposing to revise the different prices for the industrial consumers for different States and to value all the sales at the price charged to industrial consumers in Kerala. On receipt of reply, the proposal in the Show Cause Notice was confirmed by the Assistant Collector. On appeal, the Collector rejected the appeal. Hence the appeal before us. 2. The Collector while rejecting the different prices in different States for industrial consumers relied on a judgment of Bombay High Court in the case of Godrej Boyce Manufacturing Ltd. v. Union of India, 1984 (18) E.L.T. 172. He held that industrial consumers are one class in terms of Section 4 of the Central Excises and Salt Act and there cannot be more than one price for industrial consumers. 3. The main contention of the learned Advocate for the appellant is that any group of buyers who are differently placed from each other for any relevant reasons have necessarily to be treated as different classes of buyers. Owing to factors as demand/supply and other market conditions, levels of competitions, taxation structure etc., the same goods have necessarily to be sold at different prices. He however, submi....
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.... the normal price of such goods in relation to each such class of buyers;....." 8. A reading of Section 4 makes it clear that for the purpose of determining the assessable value it is the price at which such goods are ordinarily sold by the assessee in the course of wholesale trade where buyer is not related person and the price is the sole consideration for sale is relevant. 9. It is not disputed that the various industrial consumers situated in various States are not related persons and that the different prices are the actual prices at which the appellant sells the goods to various industrial consumers in various States, and the price is the sole consideration for sale. Therefore, the different prices to different industrial consumers in different States satisfy the condition of normal price laid down in Section 4. However, the contention of the Department is that there cannot be different normal prices in respect of a particular class of buyers. Industrial consumers being one class of buyers there should be one normal price even though they are placed in different regions. In this context, we may refer to the Order of this Tribunal in Amar Chemical Industries v.....
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....act and there is no evidence that it is influenced by extra-commercial consideration or there is flow-back to the manufacturer and price is sole consideration for sale, each such contract price shall be the normal price for the purpose of Section 4. In the instant case, it is not the case of the Department that the price is influenced by extra-commercial consideration or that it is not sole consideration for sale or that they are related persons of the appellant. It is also not disputed that it is the actual price which is charged from various industrial consumers from different States. In view of the above, we are of the view that the price charged by the appellant from various industrial consumers from different regions represent the price under Section 4 and the assessable value should be determined on the basis of different prices charged from different consumers from different States. 12. It is true in Godrej Boyce (supra) it was held that :- "But wholesale dealers in India cannot be considered as belonging to different classes simply because they are located in different towns and cities unless there are different class of buyers there cannot be different normal price f....
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....ponding class of buyer. It is evident that the first proviso to Section 4(1)(a) permits the adoption of only a single or uniform price in respect of buyers belonging to a particular class and in that proviso there is no authority for the determination of separate assessable values in respect of buyers belonging to different sub-classes where it may be possible to group the buyers in a particular class or to different subclasses on the basis of certain common factors. 17. In my view the judgment of Bombay High Court in the case of Music India v. Union of India reported in 1986 (25) E.L.T. 1032 which has been referred to by the learned Member (J) is not relevant, in that case it was held that regional discount is deductible from the sale price for arriving at the value under Section 4(1)(a). In the appellants' case in terms of proviso (1) to Section 4(1)(a) only a single price was determinable in respect of sales of white cement to industrial consumers who were treated as belonging to a particular class. Determination of separate assessable values in respect of industrial consumers in different States or geographical regions by deeming them as constituting sub-classes of a cl....
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....he observations we reproduce in full para 25 of the said Report :- ****** Learned advocate has submitted that the aforesaid observations of the court cannot be taken as laying down an absolute rule of law that there cannot be different classes of the same class of persons (wholesale dealers) because they are located in different towns or cities. Learned advocate submits that it is so because the court has used the word 'simply' while holding that wholesale dealers in India cannot be considered as belonging to different classes simply because they are located in different towns or cities. He submits that use of the word 'simply' by the court is very significant. If the only criterion for treating the class of wholesale dealers as different classes because of their different location of towns and cities then alone the court had held that they cannot be treated as different classes. Learned advocate submits that if there are other factors, apart from the location of the dealers (persons) in different towns or cities or regions then there is no prohibition in treating such persons located in different regions or towns or cities as different classes. He submits that in the instant....
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....ection 4 are pari materia and there is no change in the concept of valuation under the two provisions, as held by the Supreme Court in the case of Bombay Tyres International Ltd. [1983 (14) E.L.T. 1896]. The ratio of Sharada Silicate, he submits would be equally applicable to the new Section 4. The change that has been made in new Section 4 is laying down the rule, as held in Sharada Silicate, mentioned supra, that there can be different prices for different classes so long as classes are based on commercial considerations. In the instant case, he submits that Revenue has not challenged the classification made by the appellant that it is not on commercial consideration. 23.2 Next submission of the learned advocate is that instead of submitting a common price list for all industrial consumers in different regions, the appellant had the choice of submitting the price list as if under the contract between the manufacturer and the customer and the appellant could avail of the same normal trade discount for industrial consumers which he has shown for the industrial consumers as a whole in different regions, under the contracts with the individual buyers. In such a case the depar....
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....oresaid concept of value of the goods for the purposes of assessment to duty. It is apparent from the reading of Secton 4(1) (a) that normally price to all buyers is to be the same at which the goods are ordinarily sold in the course of wholesale trade for delivery at the time and place of removal. Proviso (i) carves out an exception to the uniqueness of the price under Section 4(1) (a) laying down that there may be different prices for the purposes of Section 4 if such goods are sold by an assessee at such different prices to different classes of buyers. The expression 'class of buyers' has not been defined either in Section 4 or in any other provisions of the Act. It is, therefore, left to the choice of the manufacturer/assessee to form classes of buyers. The question that arises in this case is whether classification of buyers to be made by an assessee would be at his mere whim and fancy or would have some nexus to commercial practices of sale of goods and business. 24.2 I am of the view that classification to be adopted by an assessee must be on objective criterion and should not be based on his mere whim and fancy; otherwise there will be a scope for a manipulation and....
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.... of the expression 'classes of buyers'. 25.2 To draw an inference regarding 'class of buyers' from the definition of 'wholesale trade' in Section 4 is not desirable, nor is it legally permissible. The purpose of definition of 'wholesale trade' appears to be to take within its scope the sales not merely to dealers who further distribute the goods to consumers, but also sales to consumers, such as Government bodies, hospitals, etc. It is for this purpose that a broad classification of various types of consumers has been made who purchase the goods in wholesale lots (otherwise than in retail) from an assessee. The definition of `wholesale trade' indicating some of the classes of buyers does not appear to give an exhaustive list of classes of buyers for the purposes of proviso (i) to Section 4(1)(a). 25.3 Learned JDR's reliance on Ashok Leyland's case is not well founded because the respondents therein, as is apparent from the extracts of para 7 set out earlier, did not make any distinction between various classes of buyers themselves. The respondents therein were trying to make out a new case for different prices to different classes of buyers which has been turned dow....