ASHOK LEYL AND LIMITED Vs. GOVERNMENT OF INDIA

JUDGEMENT

(1.) THE petitioner in W.P. No. 4764 of 1978 is engaged in the manufacture of heavy duty motor vehicles and the goods manufactured by it are liable to excise duty under the Central Excises & Salt Act, 1944, hereinafter called the Act. Since there was a change in the warding of Section 4 of the Act effective from 1-10-1975, the petitioner was directed to submit its price lists of various goods and accordingly they were submitted. THE 'value' of the goods has to be determined at the price at which it charged to its dealer whereas the third respondent treated the main dealers appointed by the petitioner in India as 'related persons' within the meaning of the definition of that word under Section 4(4)(c) of the Act, which is to the following effect :

(2.) SRI Ramasubramaniam, learned counsel for the petitioner contends that the word 'related person' would be applicable only to such of those instances where the manufacturer is directly or indirectly interested in the business of the main dealer or distributor and that those interests should exist mutually. The definition of the word 'related person' being inclusive in nature, it is not every distributor of an assessee's products who would be a 'related person'. The main dealer cannotipso factobe treated as a 'distributor' and what is to be been is, whether, from the terms and conditions of the agreement, the relationship is one which brings about the ingredients contemplated under the expression 'related person and not to be approached on the nomenclature used, be it 'distributor' 'main dealer' or otherwise. According to him in the instant case, apart from the expression 'main dealer' being used, even the terms and conditions clearly bring about that the sales have been effected on principal to principal basis and the legal rights in the goods get transferred in favour of the 'main dealer' as soon as the goods are delivered to him. Further 'main dealer' in his own right can deal with the goods subject to the usual conditions which are necessary for maintaining the obligations for business efficiency and on such other terms which are in the interests of the ultimate consumers. The agreement entered into is only with regard to post-sale obligations which would not detract from the fact that a completed sale has taken place in favour of the 'main dealer'. A 'distributor' is placed in a different position and the different connotations between a 'dealer' and a 'main dealer' had not been properly understood by the respondents. It is not every distributor who would be involved in the concept of 'related person' but only to that category of distributor who is also a relative of the assessee. He relies upon the decisions rendered inS.M. Chemicals & Electronics and anotherv.R. Parthasarathy & others(1980 E.L.T. page 197).Jay Engineering Works Ltd. v.Union of India(1981 E.L.T. page 284) (Delhi) andAmar Dye-Chem Ltd. v.Union of India(1981 E.L.T. page 348) claiming that on identical points involved in those decisions, the orders passed by the aurhorities under the Act have been set aside.

(3.) THE assessable value is being determined under Section 4 of the Act. It is only the terms and conditions which are to be looked at to find out whether the concept of 'related person' as defined under section 4(4)(c) of the Act exists, in that, in the business conducted by the assessee and that of the persons associated with it, they have interest, directly or indirectly, in the business of each other or not.