ORDER :- The only question which arises for consideration in these appeals is as to whether the firm of M/s. Alok Textiles could be said to be related person within the meaning of that expression as defined in Cl. (c) of sub-sec. (4) of S. 4 of the Central Excises and Salt Act, 1944 and whether the value of the excisable goods for the purpose of levy of excise duty in the hands of the respondents could be taken to be the whole-sale cash price at which the excisable goods were sold by the firm of M/s. Alok Textiles on the basis that the firm of M/s. Alok Textiles was a related person. The facts giving rise to these appeals may be briefly stated as follows :

The respondents are a limited company carrying on business of manufacturing textiles in Surat. They sold the entire goods manufactured by them to about 15 to 20 wholesale dealers and one of such dealers was the firm of M/s. Alok Textiles. The partners of this firm are related to some of the Directors of the respondent. The Department contended that the value of the excisable goods for the purpose of levy of excise duty in the hands of the respondent must be calculated by reference to the wholesale cash price at which this firm sold goods in the course of wholesale trade because the firm of M/s. Alok Textiles was a related person. This view taken by the Department was challenged by the respondents by filing a writ petition in the High Court of Gujarat. The High Court by its judgment dated 28-10-80 upheld the contention of the respondents that the concept of related person as set out in Cl. (c) of sub-sec. (4) of S. 4 was ultra vires Entry 84 in List I of the 7th Schedule to the Constitution and the definition of that expression must therefore be declared to be unconstitutional and void. The High Court also held that the value of the excisable goods must therefore be taken to be the wholesale cash price at which the excisable goods were sold by the respondents to the wholesale dealers and that the post-manufacturing expenses were not to be included in the wholesale cash price for the purpose of determination of the value of excisable goods for levy of excise duty. This view has been challenged before us on behalf of the appellant in this appeal preferred with certificate obtained from the High Court.

2. Having regard to the decision of this Court in Union of India v. Bombay Tyres International, (1984) 1 SCR 347 : (AIR 1984 SC 420), the view taken by the High court that the definition of related person in Cl. (c) of sub-s.(4) of S. 4 is unconstitutional and void has to be rejected. We have read down the definition of related person and held that on the view taken by us in regard to the interpretation of this definition, it cannot be said to be ultra vires or void. But even on the interpretation placed by its on the definition of related person, it is difficult to see how the firm of M/s. Alok Textiles could be said to fall within the category of related person, because though the firm of M/s. Alok Textiles had interest in the business of the respondents, it could not be said that the respondents had any interest, direct or indirect, in the business of M/s. Alok Textiles. Moreover the firm of M/s. Alok Textiles was not the only firm to which the excisable goods were sold by the respondents in the wholesale trade. The respondents sold only 34 to 40% of the total production to the firm of M/s. Alok Textiles and the remaining production was sold to other wholesale dealers. The Assessing authorities were therefore clearly wrong in taking the wholesale cash price at which the excisable goods were sold by the wholesale traders as the value of excisable goods for the purpose of levy of excise duty. The wholesale cash price at which the excisable goods were sold by the respondents to M/s. Alok Textiles and other wholesale dealers was the only price liable to be taken for determination of the value for the purpose of levy of excise duty.

3. The High Court also observed that for the purpose