Lajja Ram, Member (T)

1. This is an appeal filed by M/s. Gora Mal Hari Ram Ltd., New Delhi, against the Order-in-Appeal No. 134/CE/Appeal/DLH/92, dated 30-4-1992, passed by the Collector, Central Excise (Appeals), New Delhi.

2. The appellants were engaged in the manufacture of detergent cakes and detergent/washing powder. The goods were sold by them through their distributors. They were having distributors for Delhi region and distributors for outstation. They filed separate price lists for Delhi distributors and for outstation distributors. Higher prices were declared for Delhi distributors and lower prices were declared for outstation distributors. In both the cases the sales were effected at the factory gate, and in both the cases the price lists were filed in Part I of the price list proforma. Part I of the price list proforma related to the determination of value for goods sold to unrelated buyers in the course of wholesale trade, under the main definition case, in terms of the provisions of Section 4(1)(a) of the Central Excises and Salt Act, 1944 (hereinafter referred to as the 'Act').

3. It was alleged in the show cause notice that the Delhi distributors and the outstation distributors were the same class of buyers, and that the class of buyers did not change merely because they are located in different regions, and that the difference in the prices could not be based upon territorial segregation.

4. According to the appellants, different prices were charged by them from their different classes of buyers, on the basis of territorial classification of their Delhi distributors and outstation distributors. The reason for charging lower rates from their outstation distributors was to meet the competition at outstation places, and to develop new markets. They submitted that in the outstation markets, they have to compete with other manufacturers of the area who are closer to such markets and who are located in such outstation markets. It was also submitted that the incidence of local taxes and other charges had also been taken into account while fixing their prices for outstation distributors.

5. The Assistant Collector, Central Excise, Division HI, New Delhi, relying upon the Tribunal's decision in the case of Shakti Insulated Wires Pvt. Ltd. v. Collector of Central Excise - MANU/CE/0498/1990 : 1990 (49) E.L.T. 554 (Tri.), confirmed the demand.

6. While filing the appeal to the Collector, Central Excise (Appeals), New Delhi, the appellants referred to their price pattern as "providing different discounts for different classes of buyers located in different territories." They further stated that "in the price list the appellant had indicated the respective wholesale prices for the respective territories, instead of distinguishing them by reference to discounts."

7. The Collector, Central Excise (Appeals), after examining the provisions of Section 4(1)(a) of the Act, observed that the prices charged by the appellants from their outstation customers did not satisfy the strict requirement of that section. He further observed that the wholesale dealers by themselves form a class and even though they are located at different places, they can only form one class of buyer. In this connection, he referred to the Tribunal's decision in the case of Collector, Central Excise v. Orissa Cement Ltd. - MANU/CK/0004/1984 : 1984 (17) E.L.T. 161 (Tribunal), and the Bombay High Court's decision in the case of Godrej Boyce Manufacturing Company Pvt. Ltd. v. Union of India, MANU/MH/0532/1984 : 1984 (18) E.L.T. 172 (Bom.).

8. The Collector, Central Excise (Appeals) observed that in this case the lower price for outstation customers is not regional discount and that the different prices charged from different outstation customers were not the discounted prices but were individually varied lower prices due to varying freight, octroi, sales tax etc., the class of buyer remaining the same.

9. The case was posted for hearing on 10-9-1993 when Shri N.V.