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CUSTOMS, EXCISE AND GOLD (CONTROL) APPELLATE TRIBUNAL, NEW DELHI
S. Venkatesan, M. Gouri Shankar Murthy, D.N. Lal, JJ.
Bombay Latex & Dispersions (P.) Ltd. -Appellant
Versus
Collector of Central Excise, Bombay -Respondent
Order No. 696 of 1984-A, 696 of 1984
Decided On : 12-10-1984
J.R. Gagrat, R.C. Pandey,A.K. Jain
M. Gouri Shankar Murthy, Member (J)
1. Certain questions relating to the construction and applicability of the Notification No. 120/75-C.E., dated 30-4-75, in the facts and circumstances of the case, arise for consideration in this Revision Application to the Government of India, transferred to and heard by the Tribunal, pursuant to Section 35P of the Central Excises and Salt Act, 1944 (the Act, for short).
2. The aforesaid Notification (copy at page 3 of the paper book) exempts goods falling under Item No. 68 (of the First Schedule to the Act) cleared from the factory of manufacture, on sale, from duty leviable in excess of the duty calculated on the basis of the invoice price charged by the manufacturer, provided that (in so far material),-
"(iv) the invoice price is not influenced by any commercial, financial or other relationship whether by contract or otherwise between the manufacturer or any person associated in business with the manufacturer and the buyer or any person associated in business with the buyer other than the relationship created by sale of the aforesaid goods;"
3. It is the fulfilment of condition (iv) of the aforesaid Notification extracted supra that requires to be decided in the following facts and circumstances of the case-
(a) the Appellant manufactures baby products and rubber goods falling under Item No. 68 of the First Schedule and opted for the benefit of the exemption in the aforesaid Notification on 13-9-75 ;
(b) the Appellant had issued letters of appointment to more than 600 stockists in various places throughout the country and at times to a plurality of stockists in some of the places. The letters were uniformly the same with all the stockists and provided, inter alia, that-
(i) the stockists are to stock the Appellant's products in reasonable quantities so as to enable execution of orders procured by the Appellant's sales staff. They are to maintain a level of stocks for a minimum period of two months. They are also to pay for the stocks despatched to them through the Bank ;
(ii) the stockists are to be given a discount of 6% on the trade price in the invoice itself and a further discount of 2% to cover delivery charges;
(iii) all defective stocks are to be replaced free by the Appellant;
(iv) the orders booked by the Appellant's salesman should be executed within two to three days and if any such order is cancelled or refused by the retailer, the Appellant should be informed ;
(v) stocks should be sold as per price-list plus sales tax and octroi only ;
(vi) the stockists are to keep deposits of specified amounts (varying widely between one stockist and another) with the Appellant and communicate the acceptance of the aforesaid conditions ; (A specimen copy of the agreement is at page 13 of the paper book);
(c) it would also appear that the Appellant pays overriding commission to the stockists where the Appellant sells directly to anyone in the area for which the stockists had been appointed ;
(d) the Appellant was also, admittedly, manufacturing nipples, feeders, water bags, etc. as bonus articles and clearing the same without separate payment of duty ;
(e) a notice dated 10th March, 1977 was issued requiring the Appellant to show cause as to why,-
(i) a price-list under Section 4 of the Act without availing of the benefit of the aforesaid Notification should not be filed; and
(ii) differential duty at 1% ad valor em on the basis of normal price computed in terms of Section 4 of the Act and full duty on the products cleared as bonus pieces for the periods between 30-4-75 to 31-1-77 and 1-3-75 to 31-1-77, respectively, should not be recovered, in terms of Rule 10 read with 173P of the Central Excise Rules, 1944 (hereinafter referred to as the Rules) ; (Copy of the show cause notice at page 14 of the paper book);
(f) in adjudication it was held, inter alia, that-
