1. The issue for consideration is whether, for the purpose of approval of price lists in Part II, prices backed by purchase orders could be considered as "contract price" in the absence of specific contracts entered into with different class of buyers - wholesale dealers and industrial consumers.
2. The facts of the case in brief are that M/s Jeypore Sugar Company Ltd. Rayagada are manufacturers of Ferro manganese falling under sub-heading 7202.00 of the Central Excise Tariff, 1985. They filed price lists in part II in which different prices were charged to different buyers. They submitted purchase orders along with the price lists. The same were returned to the appellant on 12.9.90 to resubmit along with copies of contracts. They very next day they resubmitted the same without copies of contracts stating that it was difficult for them to enter into contract with the buyers. They stated that almost all their customers were industrial consumers except a few agents. The Central Excise Rules have not prescribed any form of contract. An offer when accepted by both the parties becomes a promise and a promise is an agreement when supported by consideration and if an agreement enforceable by law, it automatically becomes a contract. As such, a purchase order when once a accepted is binding on both the parties and it becomes a contracts for all the purposes so far as commercial transactions are concerned. They, therefore, requested the department to approve the price lists based on the purchase orders. A Show-cause Notice was issued on 7.1.1991 asking them to show cause as to why the price lists should not be approved at a rate applicable to the wholesale trade for the relevant period or at the rate of manufacturing cost plus normal profit. In response to the said Show-cause Notice, the appellants submitted that it was the normal practice in wholesale trade in Ferro Alloys to sell the goods at different prices to different class of buyers which is in conformity with the provisions of Section 4(1)(a)(i) of the Central Excise Act, 1944. In support, they submitted a letter obtained from M/s Ferro Alloys Corporation Ltd., Sreerampur, Vizainagaram wherein it was stated that their price lists in part II backed by the purchase orders were being approved by the concerned Central Excise Authorities. The appellants, however, agreed to submit all the future price lists duly supported by contracts. They, therefore, requested the department to approve the price lists already filed without insisting on contracts. The adjudicating authority felt that the law permits acceptance of separate prices for different class of buyers provided that the same were based on a rational commercial basis. In support of this view, he relied upon the decisions in the case of Collector vs. Indian Oxygen Ltd reported in 1988 (36) ELT 730 (SC), Sharda Silicate & Chemical Industries vs. C.C.E. reported in 1979 (4) ELT j.20 (Mad) and Voltas Ltd reported in 1979 (1) ELT (J177) (SC).
The Adjudicating authority vide his order dated 27.3.91 approved the said price lists in part II filed by the appellants for the period from 6.8.90 to 19.10.90. On review of the said order, Commissioner, Bhubaneswar felt that the Order-in-Original was not legal and proper and, therefore, caused an appeal filed against the said order. The Commisioner (Appeals) vide his order dated 29.11.93 has allowed the Revenue's appeal with these remarks "In any case, the normal price is the price at which goods are ordinarily sold by the assessee where the buyer is not the related person and the price is the sole consideration for sale. It is seen that ex-factory wholesale price was available, as such the question of submission and approval of different price lists for different wholesale dealers as well as industrial consumers does not arise. There is no need to digress to examine whether the price lists submitted on the basis of purchase orders could be taken as contracts as contended by the learned Advocate for the defendants in view of the Tribunal's aggrieved by the Order of Commissioner, the appellants have filed the present appeal before the Tribunal.
3. Shri N.B. Purnachandra Rao, learned Sales Officer of the appellant Company, submits that the main issue in the 22 price lists in part II relates to the prices of the goods sold to the Industrial Consumers on the strength of the price orders which, according to the Department, cannot be termed as contract agreement. The Commissioner ignored and left this issue without discussion. He submits that in ferro alloys market sales are made to the industrial consumers and similar class of buyers on the strength of purchase orders which serve the purpose of contract under the Contract Act. The purchasers, who place orders, enter into agreement in the shape of purchase orders for small quantities for shorter period of supply, only place purchase orders in view of the fact that they are stationed at far off places from the place of manufacturer, for such transactions, instead of adopting lengthy procedure of entering into a regular contract. Ferro Alloys being buyers market, the manufacturer cannot afford to lose their customers by insisting on contract for which the buyer always reluctant to enter into contact for small quantities they purchase. Of late, in the changed scenario, the purchasers are insisting on supply of the material confirming the transactions by mere telephone also at times.
He points out that similar price lists, backed by purchase orders, of M/s Ferro Alloys Coportation Ltd have been approved by the concerned officers. The Sales Officer pleads that as per the provisions contained in sub-section (5) of Section 35E ibid, the Commissioner has no jurisdiction to review the orders of the lower authorities if the same involves any question relating to value. He disagrees with the finding of Commissioner (Appeals) to the effect that the said sub-section has not yet been brought into operation. According to him, Commissioner (Appeals) erred in recording such a finding.
4. Shri J.M. Kennedy, learned JDR appearing for Revenue, reiterates the reasoning contained in the order impugned.
5. After carefully considering the arguments advanced from both sides and on a perusal of the provisions of Section 4(1)(a) of the Cental Excise and Salt Act, 1944, we are of the view that in the facts and circumstances of the case the purchase orders, the copies of which were submitted by the appellants along with the price lists, can be construed as "contract" for the purpose of section 4(1)(a)(i) ibid and different assessable values can be accepted for different class of buyers. In view thereof, we are unable to persuade ourselves to agree with the findings as contained in the impugned order. As such, we set aside the said order.
6. In the result, the appeal is allowed with consequential relief, if any, to the appellants.