ORDER
Gowri Shankar, Member (Technical)
1. The appellant is a manufacture of egg trays made of paper pulp. It sells goods either from its factory at Pune for from its five sales depots located at Mumbai, Hyderabad, Gudiwada, Eorde and Coimbatore. At the relevant time, it sold egg trays from the factory at Rs.105.02 and Rs. 103.91 for different periods and at Rs.91 Rs.90.52 all being for 140 pieces from it s four depots, excluding the one at Mumbai.It is stated that the appellant sold the goods from this depot at the same price as is sold them from the factory. Notice issued to the appellant proposed to apply to the sales from these four depots the price at which it sod them form the factory. The Asst. Collector (whose order has been confirmed by the Commissioner(Appeals) confirmed the proposal in the notice. Hence this appeal.
2. The contention of the representative of the appellant is hat these four depots were set up to cater to the demand in the four southern states. The appellant had necessarily to sell these goods at a lower price in order to compete with other manufacturers. The ratio of the decision of the Tribunal in CCE vs. Thaparia Tools Ltd. & Ors. 2000 (89) ECR 56 is relied upon. The departmental representative adopts the reasoning in the order of the Commissioner.
3. The judgment of the Supreme Court in Indian Oxygen Ltd. vs. CCE 1988 (18) ECR 161 makes it clear that where the goods are marketed at the factory gate it is the price at which the manufacturer sells the goods at this market that is to be applied to its sales from the depot. We are of course considering a situation prior to amendment of Section 4 of the Act in September 1996, providing for a depot to be a place of removal. It is this judgment that the Commissioner(Appeals) and Asst. Commissioner have applied. It is now settled that in and that different prices to buyers in different regions are in conformity with the provisions of Section 4 of the Act, on the view that if the difference is motivated by commercial considerations, the buyers in each region constitute a separate class. This view, first expressed by the Tribunal in Gora Mal Hari Ram vs. CCE 1994 (69) ELT 269 has been widely followed. In CCE vs. Thaparia Tools Ltd., the question was whether this principle would apply to a case in which the sale from the factory and the sale from the depot were to different class of buyers. Gora Mal Hari Ram does not appear to have been cited before this bench. Independently of this decision, the larger bench of the Tribunal has come to the s same conclusion. It said, “In other words, wholesale dealers of a particular region can constitute a separate class of buyers. When sale ate factory gate is to one class of such buyers and sale from depot, to which stock has been transferred, takes place to other class of buyers, ex-factory price charged cannot be relevant normal price for assessing duty of those goods.”
4. It follows therefore, that if the appellant can show that it did not sell from factory or its depot at Mumbai any goods to any buyer located in the four southern states, and it did not sell from any of the four depots in the so then states to any buyer located outside them, it would have sales for two different recognisable class of buyers, provided that the difference in price was due to commercial considerations. This would not hold true if these conditions were not satisfied. If the department can show that the difference in price was not motivated by commercial considerations , or that the sales pattern was such that there was no clear distinction between these two ares (the four so then states and rest of the country), and there were sales cutting across them, the distinction would blur and it may not then be said that the sales from the depots under consideration were to different classes of buyers. In that case, the application of the ratio of Indian Oxygen would have to be upheld.
5. The matter is required to be examined in this context. The representative of the applicant says that he will make available to the Asst. Commissioner the data in support of his contentions with two months fro the receipt of this order. On considering such data and any their material that the department may produce, the Asst.Commissioner shall pass orders in accordance with law.
6. The appeal is accordingly allowed and the impugned order set aside.