Sterling Abrasives Pvt. Ltd. Vs. Collector of C. Ex. - Court Judgment

Excerpt:
1. appellant is absent but has sent a request for decision of the appeal on merits. we have heard shri m. ali, jdr and perused the papers.2. appellant, engaged in the manufacture of bonded abrasives, filed price lists in part i indicating price to wholesalers and in part ii indicating price under contract entered into with buyer, m/s. sterling abrasive agency and the price declared was rs. 518.93 (less 10% discount) and rs. 345.65 (less 10% discount) under the respective price lists.3. the dispute in the appeal relates to clearances made during the months of march, april, july and august of 1985. during these months the only wholesale buyer was m/s. sterling abrasive agency who had entered into contract with the appellant. this meant that m/s. sterling abrasive agency paid a lower price for the quantity of goods covered by the contract and higher price for the quantity of goods not covered by the contract. show cause notice dated 24-10-1985 was issued stating that there could not be two prices to the same person and the appellant would be liable to pay duty on the higher assessable value for all the goods supplied whether under contract or otherwise. appellant resisted the notice on merits as well as on limitation. additional collector confirmed the demand without considering the question of limitation.this order is now challenged.4. according to shri m. ali, while there can be different classes of buyers who effect purchases at different prices, there cannot betiifferentiation within a class and the same buyer cannot be treated as falling in two different classes. in our opinion, this submission does not have much relevance in the fact situation in this case. the appellant and m/s. sterling abrasive agency entered into a contract for supply of certain quantity of excisable goods and since the purchase was of substantial quantities, negotiated price was arrived at. this cannot mean that the manufacturer will effect sales to anyone outside contract and charge same price. the manufacturer intended to have different and higher price to wholesalers who do commit themselves by any contract to purchase any particular quantity of goods. it is apparent that m/s. sterling abrasive agency purchased the quantity contracted for and also purchased additional quantity. the purchase of additional quantity was not covered by any contract with the result that the appellant was able to charge the price shown in part i of the price list for such purchase. there does not appear to be anything wrong in the principle in the appellant paying duty on the respective purchases based on the respective prices.5. on the question of limitation, it appears that the demand for the month of march, 1985 would be barred since none of the conditions stipulated in the proviso to section 11a(1) of the central excise act is satisfied in the instant case. appellant did not suppress any facts and is not shown to entertain any intention to evade duty. all the required particulars including contracts were furnished to the department.6. for the reasons indicated above, we set aside the impugned order and allow the appeal.

Judgment:
1. Appellant is absent but has sent a request for decision of the appeal on merits. We have heard Shri M. Ali, JDR and perused the papers.

2. Appellant, engaged in the manufacture of bonded abrasives, filed price lists in Part I indicating price to wholesalers and in Part II indicating price under contract entered into with buyer, M/s. Sterling Abrasive Agency and the price declared was Rs. 518.93 (less 10% discount) and Rs. 345.65 (less 10% discount) under the respective price lists.

3. The dispute in the appeal relates to clearances made during the months of March, April, July and August of 1985. During these months the only wholesale buyer was M/s. Sterling Abrasive Agency who had entered into contract with the appellant. This meant that M/s. Sterling Abrasive Agency paid a lower price for the quantity of goods covered by the contract and higher price for the quantity of goods not covered by the contract. Show cause notice dated 24-10-1985 was issued stating that there could not be two prices to the same person and the appellant would be liable to pay duty on the higher assessable value for all the goods supplied whether under contract or otherwise. Appellant resisted the notice on merits as well as on limitation. Additional Collector confirmed the demand without considering the question of limitation.

This order is now challenged.

4. According to Shri M. Ali, while there can be different classes of buyers who effect purchases at different prices, there cannot betiifferentiation within a class and the same buyer cannot be treated as falling in two different classes. In our opinion, this submission does not have much relevance in the fact situation in this case. The appellant and M/s. Sterling Abrasive Agency entered into a contract for supply of certain quantity of excisable goods and since the purchase was of substantial quantities, negotiated price was arrived at. This cannot mean that the manufacturer will effect sales to anyone outside contract and charge same price. The manufacturer intended to have different and higher price to wholesalers who do commit themselves by any contract to purchase any particular quantity of goods. It is apparent that M/s. Sterling Abrasive Agency purchased the quantity contracted for and also purchased additional quantity. The purchase of additional quantity was not covered by any contract with the result that the appellant was able to charge the price shown in Part I of the Price List for such purchase. There does not appear to be anything wrong in the principle in the appellant paying duty on the respective purchases based on the respective prices.

5. On the question of limitation, it appears that the demand for the month of March, 1985 would be barred since none of the conditions stipulated in the proviso to Section 11A(1) of the Central Excise Act is satisfied in the instant case. Appellant did not suppress any facts and is not shown to entertain any intention to evade duty. All the required particulars including contracts were furnished to the Department.

6. For the reasons indicated above, we set aside the impugned order and allow the appeal.