ORDER
K.K. Kapoor, Appellate Collector
1. This is an appeal against the rejection by by Assistants Collector of a refund claim of the appellant for 2,47,679.23. The appellants claimed the refund because they held that duty on their products was correctly leviable on the basis of their ex-factory wholesale cash price, while the same was cleared by them on assessment on the basis of the Distributors/Selling Agents wholesale price. It appears that the appellants have an agreement with M/s. Dunlop India Ltd. who are described by the Assistant Collector as their sole distributor. The Assistant Collector has further stated in the Adjudication order that the percentage of sales by the appellants of their goods to purchasers other than M/s Dunlop India Ltd. during the period May 1971-72, 1972-73 and in 1973-74 (upto 2.1.74) worked out to 2%, 4% and 1.5% respectively. The evidence from records therefore establishes according to the Assistant Collector that M/s Dunlop India Ltd. were their sole Distributors and the prices charged by M/s Dunlop India Ltd. would form the basis for determination of the assessable value within the purview of Central Excise Law. The appellants have on other hand argued that their sales to Dunlop India Ltd. were at arms length and the two are totally independent companies. There are no extra commercial considerations in fixing the prices to the Distributors for which they have also submitted affidavits to the Assistant Collector. They have further stated that an agreement between the appellants and the Distributor Co. does not vitiate the acceptability of the prices to the Distributors for assessment of duty in view of the following portion of the judgment of the Supreme Court in Voltas case:
If a manufacturer were to enter into agreements with dealers for wholesale sales of the articles manufactured on certain terms and conditions, it would not follow from that alone that the price for those would not be the wholesale cash price “for the purposes of Section 4(a) of the Act if the agreements were made at arms length and in the usual course of business.
The appellants have further stated that they were free to sell their products to other parties and in fact there have been sales to other parties during the relevant period and no commission was paid to Dunlop India Limited in respect of such sales to other parties. On the point of time it has been stated that they had claimed the refund no 8.4.73 in respect of duty paid in the period from 9.4.72.
2. I have gone through the above submissions and also the submissions made during the course of personal hearing before me on 8.9.76 by Shri T.P.S. Iyer and observe that there is no evidence to suggest that the agreement with M/s Dunlop India Ltd. was not based on purely commercial consideration and was not at arms length. It is also a fact that the two units are independent entities. It is also observed that the appellants do not brand their goods by any trade mark of Dunlop and that they mark their goods as Duron. The appellants are manufacturing their goods in collaboration with M/s Brake Linings, Buxton and are free to sell the same to others. The Assistant Collector himself has observed that their sales to other parties were 2%, 4% and 1.5% respectively in the periods 1971-72, 1972-73 and 1973-74 (upto 2.1.74). In the Voltas case only 5% to 10% of the goods were sold to wholesale dealers at list price and the rest were sold to consumers at list price, which makes the case of the appellants to be stronger than the case of Voltas. In view of the above discussions the position which emerges is that the appellants have a wholesale cash market of their goods at the factory gate and these sales are made not only to M/s Dunlop India Limited but to others also. Therefore the value of the goods manufactured and cleared by the appellants should be determined under Section 4(a) of the Central Excises & Salt Act, 1944 and duty assessed in excess if any, may be refunded to the appellants. As regards the question of time bar I observe that since the appellants had made a formal application for refund on 8th April, 1973 the Limitation period for the purposes of Section 11 read with Rule 173J of the Central Excise Rules should be one year from the above date.
Sd/- K.K. Kapoor
Appellate Collector