The court's decision was influenced by the interpretation of Section 4(4)(c) of the Central Excise Act, which defines 'related persons' and requires the absence of extra commercial consideration in sales to such related persons.

ORDER

1. This appeal has been filed under Section 35-L of the Central Excise Act, 1944 (for short "the Act") against the final order passed by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (for short "the Tribunal") in Final Order No. 1576/98-A dated 16-3-1999 in Appeal No. E/3434/89-A whereby the Tribunal has allowed the appeal filed by the respondent herein.

2. Briefly stated the facts are:

M/s Xerographic Limited, Sector-15, Gandhinagar, Gujarat (hereinafter referred to as "the respondent") was engaged in the manufacture of plain paper copier machines with the trade mark "Ricoh Murphy". The respondent was selling its products through two other companies viz. M/s Murphy (India) Limited and M/s Mecotronics (P) Limited.

3. By a show-cause notice dated 25-2-1987 issued by the Collector of Central Excise, Ahmedabad (for short "the adjudicating authority"), the respondent and the aforementioned two companies were asked to show cause against various charges. It was alleged that the respondent was evading excise duty by undervaluing the goods. That the respondent and the aforementioned two companies were "related persons" within the meaning of Section 4(4)(c) of the Act and therefore the transaction between the respondent on the one hand and the two aforementioned companies on the other were not on principal-to-principal basis. The adjudicating authority held that the respondent and the two aforementioned companies were "related persons" and the price at which the photocopiers manufactured by the respondent were sold by the aforementioned two companies in the market would be the normal price for the purposes of arriving at the assessable value of the goods in the hands of the respondent.

4. The respondent, being aggrieved, filed an appeal before the Tribunal. The Tribunal rejected the contention of the respondent that the two aforementioned companies were not "related persons". It held that M/s Murphy (India) Limited and M/s Mecotronics (P) Limited were "related persons" as envisaged in the definition of "related persons" under Section 4(4)(c) of the Act. The Tribunal, on facts, held that there was no extra commercial consideration shown by the respondent while selling the goods to the aforementioned two companies. That the Department has failed to refute that the sales made by the respondent to the aforementioned two companies were on retail basis. On the question of limitation, the Tribunal held that as the price list had been regularly approved by the proper officer, the bar of limitation raised by the respondent was well founded.

5. After amending Act 22 of 1973, relevant portion of Section 4 of the Act reads as under:

"4. Valuation of excisable goods for purposes of charging of duty of a excise.-(1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value shall, subject to the other provisions of this section, be deemed to be-

(a) the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for t the sale:

Provided that

(i) where, in accordance with the normal practice of the wholesale trade in such goods, such goods are sold by the assessee at different prices to different classes of buyers (not being related persons) each such price shall, subject to the existence of the other c circumstances specified in clause (a), be deemed to be the normal price of such goods in relation to each such class of buyers;

(ii) where such goods are sold by the assessee in the course of wholesale trade for delivery at the time and place of removal at a price fixed under any law for the time being in force or at a price, being the maximum, fixed under any such law, then, notwithstanding anything contained in clause (iii) of this proviso, C the price or the maxi