M/S. SACI ALLIED PRODUCTS LTD., U.P. versus COMMISSIONER OF CENTRAL EXCISE, MEERUT

Citation: [2005] 3 S.C.R. 881 · Decided: 26-04-2005 · Supreme Court of India · Bench: S.N. VARIAVA · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

M/S. SACI ALLIED PRODUCTS LTD., U.P. 
A 
v. 
COMMISSIONER OF CENTRAL EXCISE, MEERUT 
APRIL 26, 2005 
[S.N. VARIAVA, DR. AR. LAKSHMANAN AND S.H. KAPADIA, JJ.] 
B-
Central Excises and Salt Act, 1944-Section 4(J)(a) and (b)-Sale of 
goods by manufacturer to a company in one State and to independent dealers 
in other Stat~s-Sale price to the Company lower than the price charged from 
independent dealers-Previously resale price by the company to the dealers C 
declared as assessable value for payment of excise duty as the Company was 
treated by Revenue, as related to the manufacturer-Central Board of Excise 
and Customs held that dealers in different regions cannot be treated as different 
class of buyers-Notice by Revenue to the manufacturer to take the highest 
price, at which the goods were sold as assessable value-Excise duty paid on D 
the basis of price at which goods sold to independent dealers-Show cause 
notice by Revenue under third proviso to Section 4(J)(a) proposing to take 
resale price of company as the basis for determining assessable value and 
demanding differential duty-Demand confirmed by Collector holding that 
assessable value to be uls. 4(J)(b)-Appellate Tribunal, invokingfirs~proviso 
to Section 4(/)(a), held that the dealers purchasing through the Company and E 
the dealers directly purchasing from the manufacturer being different class of 
buyers, price to the independent dealers cannot be the basis for assessing sale 
to the Company-On appeal, held: Normal price to independent dealers being 
available, same to be treated as basis for arriving at the assessable value to 
Company also-First proviso to the Section is inapplicable as the sale to F 
related buyer is not covered by the Section and since the dealers, as per the 
Circulars, cannot be treated as different class of buyers-Tribunal having 
invoked first proviso to Section 4(/)(a) has gone beyond the show cause 
notice and order of Collector-Section 4(/)(b) also not applicable-Central 
Excise Valuation Rules, 1975-Rules 5 and 7. 
Appellant-manufacturer used to sell its goods to independent dealers 
throughout the country except State of Uttar Pradesh. It sold the goods 
in the State of Uttar Pradesh though Company 'S' at a lower price. 
Company 'S' was also an independent manufacturer. Appellants used to 
tile two sets of price list, one in respect of the sale to the independent 
G 
881 
H 
882 
SUPREME COURT REPORTS 
[2005] 3 S.C.R. 
A dealers and other in respect of sale to 'S'. In the price list for sales to 'S', 
the resale price of 'S' to dealers was declared as assessable value for 
payment of e.xcise duty because the Revenue treated 'S' as related to the 
appellant. Pursuant to a Circular issued by Central Board of Excise and 
Customs, to the effect t_hat the wholesale dealers in India could not be 
considered as belonging':to different classes, Revenue issued notices 
B proposing to take the highest price at which the goods were sold by the 
appellants. Appellant filed single price list in Part-I u/s. 4(1)(a) of Excise 
Act, 1944 in respect of their Sales made to independent dealers based on 
the sale price charged to these dealers. The price list also covered sales in 
Uttar Pradesh made to 'S'. Excise duty was paid on the appellant's price 
C to independent dealers including sales made to 'S'. 
Show cause notice was issued by Revenue in relation to applicability 
of Section 4(1)(b), proposing to take resale price of 'S' as the basis for 
determining the assessable value in respect of sales made by the appellant 
to 'S' in Uttar Pradesh. On this basis, differential duty was demanded. 
D Respondent-Collector confirmed the demand holding that 'S' was a related 
person and, therefore, in view of third proviso to Section 4(1)(a) of the 
Act, excise duty was to be paid by the appellants based on the price at 
which the goods were resold by 'S' to its dealers; and that assessable value 
has to be only u/s. 4(1)(b). In appeal, the Tribunal upheld the order of 
E Collector relying on first proviso to SectiOn 4(1)(a) holding that Section 
4(l)(b) was not applicable; and that dealers of 'S' in Uttar Pradesh 
constitu_te a different Class of buyers than the dealers in other regions and 
therefore, the price of 'S' to its dealers should be the value under first 
proviso to _Section 4(1)(a) in respect of sales made by appellant to 'S'. 
F 
In appealto this Court, appellant-a-ssessee contended that Tribunal, 
by deciding the dispute under first

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