EICHER LIMITED Vs. CCE

JUDGEMENT

(1.) THE appellant is engaged in the manufacture of tractors. Its entire production is sold to its holding company. The dispute raised in these appeals is in regard to Central Excise Valuation of the tractors. The impugned orders have held that the sale price to the holding company should be rejected (being sale to a related party) and the sale price of the holding Company to unrelated parties taken as the assessable value. The orders have relied on the third proviso to Section 4(1)(a) of the Central Excise Act and definition of 'related person' in Section 4(4)(c) in passing the orders. Order -in -original No. 3/AC/V/P1 dated 28.10.80 states as under:

(2.) THE contention of the appellant is that a sale price is not to be rejected for the purpose of assessment merely for the reason that the sale transaction is between related parties. According to the appellant it is well settled that a fully commercial price between related person also can rightly constitute assessable value. During the hearing of the case, learned Counsel for the appellant relied in this connection on the decision of the Bombay High Court in the case of Ralliwolf Ltd. v. Union of India and the decision of the Tribunal in the case of Renowned Auto Products Mfrs. Ltd. v. Commissioner of C. Ex. Chennai and Beacon Neyrpic Ltd. v. Commissioner of Central Excise, Madras . The Counsel also took us through the show cause notice and pointed out that there was no allegation at all in the notice that appellant's sale price to its holding company was not a normal price or that there were any other considerations or factors affecting the price. As against this, the learned SDR has submitted that once the transaction is between related SDR has submitted that once the transaction is between related parties, that transaction value cannot constitute assessable value in the light of the decision of the Apex Court in the case of Flash Laboratories Limited v. Collector of Central Excise, New Delhi. Learned SDR also pointed out that the decision of the Tribunal in the case of Renowned Auto Mfrs. Ltd. is not attracted inasmuch as that order was rendered on noticing that there were sales to unrelated parties and those prices were lower than the sale price to the related party.

(3.) WE have perused the records and have considered the submissions made by both sides. In the case of Ralliwolf Limited (supra) the Hon'ble High Court of Bombay considered the scope of the special provision relating to sales to related persons. We read the relevant para in the judgment: