The definition of 'related person' under Section 4(4)(c) of the Central Excises & Salt Act, 1944, is not applicable to main dealers who do not have a direct or indirect interest in the business of the manufacturer and who are not distributors.

The petitioner in W.P. No. 4764 of 1978 is engaged in the manufacture of heavy duty motor vehicles and the goods manufactured by it are liable to excise duty under the Central Excises & Salt Act, 1944, hereinafter called the Act. Since there was a change in the warding of Section 4 of the Act effective from 1-10-1975, the petitioner was directed to submit its price lists of various goods and accordingly they were submitted. The 'value' of the goods has to be determined at the price at which it charged to its dealer; whereas the third respondent treated the main dealers appointed by the petitioner in India as 'related persons' within the meaning of the definition of that word under Section 4(4)(c) of the Act, which is to the following effect :

"'related person' means a person who is so associated with the assessee that they have interest, directly or indirectly, in the business of each other and -includes a holding company, a subsidiary company, a relative and a distributor of the assessee, and any sub-distributor of such distributor." *

The claim of the respondents is that the amount which the main dealer was entitled to earn on selling the goods to other dealers should be treated as part of the price of the vehicle sold by the petitioner and that excise duty should be paid on the total amount of the price for which the main dealer sells the goods. Since there was need for maintaining continuity of business without interruption, the petitioner complied with the requirements under protest and has filed this writ petition aggrieved not only against the order of the third respondent but also against the orders of the second respondent and first respondent, which had confirmed the stand of the third respondent in appeal and revision filed respectively.

2.Sri Ramasubramaniam, learned counsel for the petitioner contends that the word 'related person' would be applicable only to such of those instances where the manufacturer is directly or indirectly interested in the business of the main dealer or distributor and that those interests should exist mutually. The definition of the word 'related person' being inclusive in nature, it is not every distributor of an assessee's products who would be a 'related person'. The main dealer cannotipso factobe treated as a 'distributor' and what is to be been is, whether, from the terms and conditions of the agreement, the relationship is one which brings about the ingredients contemplated under the expression 'related person and not to be approached on the nomenclature used, be it 'distributor' 'main dealer' or otherwise. According to him in the instant case, apart from the expression 'main dealer' being used, even the terms and conditions clearly bring about that the sales have been effected on principal to principal basis and the legal rights in the goods get transferred in favour of the 'main dealer' as soon as the goods are delivered to him. Further 'main dealer' in his own right can deal with the goods subject to the usual conditions which are necessary for maintaining the obligations for business efficiency and on such other terms which are in the interests of the ultimate consumers. The agreement entered into is only with regard to post-sale obligations which would not detract from the fact that a completed sale has taken place in favour of the 'main dealer'. A 'distributor' is placed in a different position and the different connotations between a 'dealer' and a 'main dealer' had not been properly understood by the respondents. It is not every distributor who would be involved in the concept of 'related person' but only to that category of distributor who is also a relative of the assessee. He relies upon the decisions rendered inS.M. Chemicals & Electronics and anotherv.R. Parthasarathy & others(1980 E.L.T. page 197).Jay Engineering Works Ltd. v.Union of India(1981 E.L.T. page 284) (Delhi) andAmar Dye-Chem Ltd. v.Union of India(1981 E.L.T. page 348) claiming that on identical p