The definition of related person and distributor in Section 4 of the Central Excise and Salt Act, 1944 should be given a narrow and restricted interpretation.

( 1 ) JAY Engineering Works Limited (petitioner No. 1) is a limited company having its registered office at Delhi. It owns a unit in Agra known as Agra Engineering Industries where it manufactures electric fans and regulators. According to the petitioner it is also manufacturing regulators for the fans at its Agra unit but it is stated by the respondents in the counter affidavit that the regulators are not manufactured by the petitioner but that the petitioner gets them manufactured from a unit named and styled as Bharat Kumar Bhargava by supplying them requisite raw-material. The electric fans and regulators are sold by the petitioner company to dealers appointed by it and also directly to customers from its own shops in the State of West Bengal and Andaman and Nicobar Islands. In respect of the rest of the country, however, about 90 per cent of its sales are effected to Usha Sales Limited (hereinafter referred to as "usha") and to some extent directly to bulk institutional buyers.

( 2 ) WE are concerned in this writ petition with the determination of the assessable value of the electric fans manufactured and sold by the petitioner for purposes of the Central Excise and Salt Act, 1944 (hereinafter referred to as the -Act ). The dispute relates to the period subsequent to 1st October, 1975 with effect from which date Section 4 of the Act was amended by Parliament. The respondents have taken the view that the assessable value is the price at which Usha, after purchasing the goods from the assessee, sold the same to other dealers and further that the value of the regulators should also be included in the said assessable value. The petitioner s contention, however, is that the assessable value of the goods should be the price at which the petitioner sold the goods to Usha and not the resale price of Usha to other dealers. It is also contended on behalf of the petitioner that the value of the regulators should not be included in the assessable value of the electric fans till 18th June, 1977 and that such inclusion is permissible only after the said date when there was an amendment to the Tariff prescribed in respect of the above item. A further contention of the petitioner is that in determining the assessable value the petitioner is entitled to deduct from the price charged by it to Usha an. element of post-manufacturing expenses included therein. It is submitted that the petitioner company transfers the goods manufactured by it from its factory to its regional godowns situated in various parts of the country. It, thus, incurs expenses by way of freight for the transport of the goods and also godown charges. goods sold, repair charges, interest and the like and also ensures goods sold, repair charges, interest and the like and also ensures that the goods are sold in various parts of India at the same price. The contention of the petitioner is that all the expenses thus incurred by it in the post-manufacturing stage are all included in the price at which the goods are sold to Usha and thah this element of post-manufacturing expenses and profits should be deducted from the price paid by Usha before the assessable Value of the goods for the purpose of excise can be properly determined. These are the three points of controversy which are in issue in the present writ petition.

( 3 ) IT will be convenient first to deal with the question whether the respondents were entitled to ignore the bulk sales affected by the assessee petitioner to Usha for determining the assessable value and in proceeding to the next point, namely, to the price at which Usha in turn sold the goods, for arriving at the assessable value. In justification of its action in this regard the respondents rely on the amendments made in Section 4 of the Act with effect from 1st October, 1975. The relevant provisions of this section after the amendment can be briefly summarised as follows :

( 4 ) SECTION 4 (1) lays down the general principle, that the value w