GOMTI ENGINEERING WORKS AND ANR. Vs. CCE

JUDGEMENT

(1.) THE assessees in the case have filed these appeals challenging the order -in -appeal No. 266/92 dated 9.12.1991 passed by the Collector of Central Excise (Appeals), Allahabad confirming the order -in -original No. 55/92 and 58/92 dated 2.6.1992 and 4.6.1992 passed by the Assistant Collector of Central Excise, Allahabad. The two original orders were passed separately against the two appeals. The appellants are engaged in the manufacture of electric fans in their factories situated in certain backward areas of the State of U.P. and hence entitled to exemption from payment of sales -tax under the U.P. General Sales Tax Act in respect of sales within the State. The benefit was not available for sales outside the State. The appellants have networks of dealers throughout the country. They were filing price lists from time to time declaring two separate prices, higher prices for dealers in the State of UP and lower prices for dealers outside the State of U.P. and the prices were being approved. The dispute in appeal E/230/93 -A relates to price list filed in November, 1989 and July, 1990. The dispute in Appeal No. 232/93 -A relates to similar price list filed by the appellant therein. The Assistant Collector provisionally approved the price lists directing duty to be paid on the higher prices charged to dealers in U.P. in respect of clearances effected by the respective appellants. The Collector (Appeals) having confirmed these orders, the present appeals have been filed.

(2.) LEARNED counsel for the appellants contended that in view of the exemption from payment of sales -tax in respect of sales within the State of UP which is intended to help the manufacturers in backward areas, the appellants have fixed two sets of prices, higher prices for sales in UP State and lower prices for sales outside U.P. State. This is justifiable under proviso (1) to Section 4(1)(a)(i) of the Central Excises Act, 1944, since dealers in UP State fall in one class of wholesale buyers and dealers outside UP State fall in a different class of buyers. He contended that classification of wholesale buyers on the basis of regions on account of purely commercial considerations has been accepted by the Tribunal in a number of cases. He referred in this connection to Goramal Hari Ram Ltd., : 1994 (69) ELT 269 :, 1994 (52) ECR 626 (T) where practically all the prior decisions have been reviewed. That case related to two different wholesale prices declared, one for local buyers and the other for outstation buyers. Prices to outstation buyers were lower in order to meet local competition in those regions. It was held that the two sets of buyers, namely, local buyers and outstation buyers can be regarded as falling in different class of buyers, since the differentiation is made on the basis of commercial considerations. The same approach will be valid in the present case also, since the differentiation in prices in the present case also is based on the valid commercial considerations. Statutory authorities, therefore, should have approved the prices as declared by the appellant. For the reasons indicated above, we set aside the orders impugned in these appeals and allow the appeals.