LexCOLLECTOR OF CENTRAL EXCISE, MADRAS versus T.I. MILLERS LTD. MADRAS & T.I. DIAMOND CHAIN, MADRAS
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4 . COLLECTOR OF CENTRAL EXCISE, MADRAS A v. T.I. MILLERS LTD. MADRAS & T.I. DIAMOND CHAIN, MADRAS MARCH 28, 1988 B _)i [SABYASACHI MUKHARJI ANDS. RANGANATHAN, JJ.] Central Excises and Salt Act, 1944--Sec. 4--Assessable value of goods for levy of duty under Sec. 3-How to determine assessable value. ~+ Central Excises and Salt Act, 1944--Sub-sec. 4( c) of Section 4-- c ~ ' Related Person-Who is-Criteria for its determination. I The respondents manufactured goods which were assessable under Item 68 of the Central Excise Tariff. The respondents filed price lists for the sale of the goods through their distributors one of them D being M/s. T .I. & M-Sales Ltd., quoting their price to the distributors as assessable value. Subsequently the respondents required that the price charged by them from buyers at the factory gate should be accepted as the assessable value and not the price to the distributors. ~ The Assistant Collector found that the distributors were related persons as per section 4 of the Central Excises and Salt Act, 1944 and the price E at which the distributors sold the goods should therefore be the assess- able value. On appeal by the appellant-revenue, tlie Appellate Collector held that these could not be held to be the related persons. The Revenue bad found that there was an agreement existing between the respon- -i dents and their distributors according to which they were the com- pany's distributors for the sale of their goods. Major portion of the sales F were effected through M/s. T .I. & M. Sales Ltd. who were the main I! distributors of M/s. Tube Investments of India Ltd. and its subsidiary companies and rest of the sales through the other two distributors. M/s. Tube Investment of India was the holding company of M/s. T .I. Millers Ltd. The agreement.between the assessee and the T.l & M. Sales Ltd. was registered under the MRTP Act. The Revenue had further found G ~ . that there was a territorial earmarking for the operation of the dis- tributors, who also undertook advertisements and helped the sub- dealers for maintaining show-rooms .in dealer's premises. The distri- butors did not deal with competitor's goods. The Revenue had also noted that the assessee granted mark up to the distributors to cover their establishment expenses, travelling expenses, advertisements and H 355 A B c D E F G H 356 SUPREME COURT REPORTS I 1988] 3 S.C.R. sundry expenses. In view of this the revenue filed a review petition, but the Appellate Tribunal rejected the review petition and upheld the tin.d- ing of the Appellate Collector. Hence these appeals under section 3SL(b) of the Act. The question was whether the distributors were related persons of the respondents and secondly whether the expenses incurred for maintaining the show-room, advertisements etc. should also be added to the assessable value. Dismissing the appeals this Court, HELD: To find out whether the distributors were related persons of the manufacturers it is necessary to find out whether the buyer is holding company or subsidiary company or relative of the manufac- turer. From the explanation of the relationship furnished in this case, such is not the position. It appears that the link between the respon- dents T.I. Miller Ltd. Company and T.I. & M. Sales Ltd., is that the latter are the main distributors of M/s. Tube Investments of India Ltd., which is the holding company of the respondents. This relationship does not satisfy the criteria for establishing the related persons concept. These were limited companies at the material time, and it will be diffi- cult to say that a limited company has any interest direct or indirect in the business carried on by one of its shareholders. l362A-C] The mark up in the price was allowed in connection with the requirement to display the maximum sale price. The sales pattern shows also sales to other than distributors and it is not restricted only to the appointed distributors of T .I. India Limited. In the background of the facts mentioned hereinhefore and in the light of the decisions of this Court in Bombay Tyre International and Alic Industries cases we are of the opinion that the Tribunal was right and there is no cause for interference with the order of the Tribunal. l362C-E] Union of India and others v. Atic Industries Limited, [1984] 3 S.C.R. 930 and Union of India and Others etc. etc. v. Bombay Tyre International Ltd. etc. etc.
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