G. Sankaran, Member (J)

1. The present proceedings arise out of a Show Cause Notice dated 6th October, 1980 issued by the Central Government to M/s. Madras Rubber Factory Ltd., Madras (hereinafter referred to as MRF) under Section 36(2) of the Central Excises 5c Salt Act, 1944 (hereinafter referred to as the Act). The notice was in relation to Order-in-Appeal No. 1215/80 dated 21-4-1980 passed by the Appellate Collector of Central Excise, Madras, whereby the Appellate Collector disposed of the appeal before him against the order of adjudication dated 24-1-1978 passed by the Assistant Collector of Central Excise, Madras.

2. The proceedings initiated with the issue of the aforesaid Show Cause Notice came to be transferred to this Tribunal in terms of Section 35P(2) of the Central Excises Salt Act for disposal as if it were an appeal filed before it.

3. The Supreme Court, in Special Leave Petition (Civil) Nos. 1409-10/77, 10108/80 C.A. Nos. 3195/79 and 6811/83 (The Assistant Collector of Central Excise etc. etc. v. Madras Rubber Factory, etc. etc.), passed an order dated 8-11-1983 directing the Tribunal to dispose of the question as to whether the sales effected by MRF at their depots are not retail sales as contended by the Union of India in its Review Notice dated 6-10-1980. If they are retail sales, the Tribunal was directed to also determine what are the deductions that are permissible to MRF under Rule 6(a) of the Central Excise (Valuation) Rules, 1975 (hereinafter referred to as Valuation Rules).

3a. In pursuance of the directions of the Supreme Court the appellant and the respondent have filed documents in support of their respective stands.

4. Consequent on the coming into force of the new Section 4 of the Central Excises Salt Act, 1944 with effect from 1-10-1975, MRF submitted on 22-9-1975 a price list in Form V in terms of Rule 6(a) of the Valuation Rules in respect of the goods covered by Items No. 16, 16A, etc. of the Central Excise Tariff Schedule (CET) which were manufactured by them. In the said letter, they declared that there was no sale by them to a buyer in the course of wholesale trade for delivery at the time and place of removal and that, therefore, Section 4(1)(a) of the Act was inapplicable. Hence, the assessable value, according to MRF, fell to be determined under Section 4(1)(b) of the Act. They further stated that their goods were transported to their various Branches throughout the country from where they were sold to various persons, retail outlets and others who purchased their specific requirements from time to time in retail. MRF declared that there was no sale of tyres direct to the consumer. In all, they had more than 5,700 retail outlets. There was no agreement between MRF and the outlets either on the off take of volume or the value. The price for delivery at any place of destination was uniform because MRF had built into the price list freight-equalization. For all these reasons, MRF contended that the goods were sold by them in retail and that the prices shown in the price list were retail prices and that their case was covered by Rule 6(a) of the Valuation Rules. MRF claimed appropriate deductions from these retail prices to arrive at the price at which they could have sold such goods in the course of whole-sale trade. For this purpose, they enclosed certain statements of calculations.

5. The Assistant Collector, however, considered that the assessable value had to be determined in terms of Valuation Rule 7 since, in his view, the sales were whole-sale other than ex-factory.

6. By a letter dated 1-10-1975 addressed to the MRF, the Assistant Collector stated that since the dealers who purchased goods from MRF would re-sell them in retail, the prices at which MRF sold the goods to the dealers could not be treated as retail prices. He also stated that the sale to industrial consumers and State Transport Organisation, Government, etc., should be deemed as whole-sale in view of the definition