ORDER

1. The short question that arises for consideration is as to what is the wholesale price, on which the excise duty is payable, of the fabrics which are manufactured by the appellant Company ?

2. The appellant was manufacturing fabrics which were being sold to four wholesale dealers who were M/s. Shiv Narain Amar Nath, M/s. Hindustan Traders, M/s. Anand Textiles and M/s. Narain Das Sajan Lal. These four parties in turn delivered the goods taken from the appellant to M/s. Agarcon (India) Ltd., Kanpur M/s. Agarcon (India) Ltd. then sold the said fabrics to other wholesale dealers.

3. The Collector of Excise decided that the value, for the purpose of excise duty, of the goods should be the price which was charged by the appellant from the said four parties. The proposal to adopt the sale price of M/s. Agarcon (India) Ltd., as being the wholesale price for the purpose of excise duty, was dropped by the Collector by his order dated 27-2-1986.

4. Thereafter the Central Board of Excise and Customs issued a show-cause notice as, in its opinion, the decision of the Collector was not correct. Thereupon an order was passed on 14-1-1987. In the said order, it was, inter alia, stated that the manner in which the goods were sold by the appellant herein was extra-commercial and tortuous and the said four parties namely, M/s. Shiv Narain Amar Nath, M/s. Hindustan Traders, M/s. Anand Textiles and M/s. Narain Das Sajan Lal "were not genuine wholesale dealers but were only commission agents and they were receiving the goods only on paper without even taking delivery of the same and were showing the sale of such goods to M/s. Agarcon (India) Ltd". After examining all the facts on record, the Board by the said order directed the adjudicating authority to apply to the Customs, Excise and Gold Control Appellate Tribunal for setting aside the order of the Collector. Pursuant thereto, the matter came to be decided by the Tribunal.

5. Before the Tribunal two preliminary objections were raised by the appellant herein. They are as follows :

"(i) The Board had not specified the points arising out of the Collectors order-in-original which required determination by the Tribunal; and

(ii) The point made in the Boards order that M/s. Agarcon functioned as the commission agent of the respondents did not arise out of the Collectors order since it was neither raised before the Collector in the show-cause notice nor did the Collector deal with it in his order."

6. The Tribunal came to the conclusion that the Board had specified the points which arose from the Collectors order and, therefore, there was no merit in the first preliminary objection. The Tribunal, however, found merit in the second preliminary objection but came to the conclusion that for the view which it was taking it was not necessary to decide the same. The Tribunal after examining the evidence came to the conclusion that M/s. Agarcon was not a related person of the appellant and therefore, the selling price of M/s. Agarcon could not be regarded as the wholesale price of the appellant herein. The Tribunal, however, came to the conclusion that the four firms which came in between the appellant and M/s. Agarcon (India) Ltd. were mere shadows. It took note of the fact that these four firms had virtually no funds of their own, while they were having turnover of crores of rupees. These firms also had no godowns or storage place and they were merely carting away the goods from the appellants factory and unloading them directly at the premises of the M/s. Agarcon (India) Ltd. Another important fact which was taken note of by the Tribunal was that all the parties not only belonged to Kanpur but the business address of M/s. Agarcon and all these four firms was the same. From these facts, the Tribunal concluded that the wholesale price, for the purpose of assessment, should be the price which was paid by M/s. Agarcon. In other words, the Tribunal was of the opinion that the so-called sale which was mad