Per Shri V.P. Gulati :

These appeals are filed by the Revenue. Since a common issue arises for consideration in these appeals, they are taken up together for disposal.

2. The Revenue is aggrieved of the findings of the lower authority in respect of the acceptability of the sales price for sale made by the respondents through M/s. Dynaspede Integrated Systems Pvt. Ltd. (hereinafter referred to as DIS) as per the invoices as raised by the respondents and held to be acceptable for assessment purposes. The brief facts of the case are that the respondents obtained technical knowhow provided by M/s. DIS. The respondents manufactured certain goods and affected sale of the goods by them directly to the customers as also based on the orders procured by DIS.

In respect of the orders which were procured by DIS, the invoices were raised showing the name of the consignee with the words "on account DIS." The respondents allowed 20% discount in respect of goods which were so consigned. DIS subsequently raised another invoice on the consignee wherein depending upon their sales capability they would give discount at a varying rate. This discount given was in all cases less than 20%. Demand was raised against the respondents for the reasons that the sales which were made based on the orders procured by DIS could not be taken to be sales at arms length and sales were alleged to have been made to a related person and for that reason the price which was adopted in the show cause notice was the one at which the goods invoiced by DIS to the customers. The lower authority in his order has held that by reason of the technical knowhow which was supplied and for that reason the royalty payment of 7.5% on the annual turn over was paid by the respondents to DIS relationship between the respondents and the DIS could not be taken to be that of a related person in terms of Section 4. Further the lower authority has observed that there was direct sales to their customers as also there was sales through the medium of invoicing of the goods by DIS. The respondents had been given the facility for assessment of invoice value under 173C (11) of the Central Excise Rules, 1944. The respondents were not filing any price list in respect of the goods manufactured by them.

3. The learned DR for the department has pleaded that in the show cause notice it was also brought out that DIS was an agent of the respondents and a ground has also been taken in this regard in the grounds of appeal. He has pleaded that sales as were made to the customers through the medium of invoicing by DIS could be taken to be only sales to the consignment agent. He has pleaded that the Hon'ble Supreme Court in the case reported in 1988 (17) ELT 607 has held that commission paid to the selling agents is not deductable from the assessable value as trade discount if as per the agreement the selling agent is to function as agent of the assessee. He has pleaded that therefore, the lower authority has not addressed the matter in this background even if the sales were not made to the related person. In regard to the limitation he has pleaded that lower authority in case of one of the show cause notices where the notice was issued beyond the period of 6 months has stated that the invoice which are raised by the respondents on DIS were enclosed with the gate passes and therefore for that reason there was no suppression of fact. He has pleaded that this position does not appear to be correct and the learned lower authority could have called for the RT 12 returns.

4. Shri R. Subramoney, Chartered Accountant for the respondents has pleaded that for the reason of payment of royalty, the sales by the respondents to DIS could not be taken to be sales to the related person. He has also adopted the reasoning of the learned lower authority and has pleaded that the lower authority's order requires to be upheld.

5. We have considered the pleas made by both the sides. We observe that on the facts of this case, the lo