ORDER
S. Kalyanam, Vice-President
1. This appeal is directed against the order of the Collector of Central Excise (Appeals), Madras, dated 29.9.1983.
2. The issue for consideration is whether the sale of goods at different places to the buyers of Punjab region could be construed to be the sale to different classes of buyers within the meaning of Section 4 of the Central Excises & Salt Act, 1944 for the purpose of assessment. On going through the records and after hearing the parties, we find that the facts as appear in the present case are governed by the ratio of the ruling of the Special Bench in the case of Gora Mal Hari Ram Ltd. v. CCE, Delhi . In the present case, the appellants are clearing the goods at a lesser price to the buyers at Punjab region and filed separate price list categorizing them as different classes of buyers and the issue is with reference to the acceptability of the price list under the provisions of the Act. We also take note of the fact that the price list in question was approved by the department from 1976 to 1982. The Special Bench dealing with the issue in the case of Mis. Gora Mai Hari Ram Ltd. has observed as under :
Valuation – Classes of buyers – Assessee having two different price structures for local and outstation wholesale buyers – Prices lower for outstation dealers in order to meet local competition in those regions by providing for freight and local taxes elements – Local and outstation wholesale dealers treatable as different classes of buyers when differential based on valid commercial reasons – Sections 2(k), 4(1)(a), proviso (i) and 4(4)(e), of Central Excises and Salt Act, 1994 – Under proviso (i) of Section 4(1)(a), what is “the normal practice of the wholesale trade” has to be determined on trade considerations. As regards the sale “by the assessee at different prices to different classes of buyers”, it appears reasonable to assume that it is for the assessee to classify his buyers according to his commercial considerations; of course, the classification has to be rational and identifiable, based purely on commercial considerations. It could not be arbitrary or capricious. If the classification of his buyers by the assessee is within the basic scheme for determination of the assessable value under Section 4 of the Act, then no objection could reasonably be raised by the Central Excise department for determining the assessable value on the basis of “different prices to different classes of buyers (not being related persons)”. The expression ‘different classes of buyers’ occurring in the proviso (i) to Section 4(1)(a) of the Act, read with the definition of ‘wholesale dealer’ under Section 2(k), and of ‘wholesale trade’ under Section 4(4)(e) appear to cover not only a trader, manufacturer, broker, commission agent, contractor, stockist, industrial consumer, Government and local authority, but also different dealers and buyers, who deal in and buy for resale, or purchase their requirements in wholesale. There appears no doubt that all the wholesale dealers and all the wholesale buyers in the whole of the country could not be taken to form a single class of buyers. Taking all the relevant considerations into account, we consider in the circumstances of this case, on the basis of the facts on record, that the appellant’s Delhi distributors and their outstation distributors are two different classes of buyers, for the purposes of proviso (i) to Section 4(1)(a) of the Act, and accordingly each price charged from these different classes of buyers is the normal price in relation to each of them. distinguished, paras 23, 30, 31, 32, 33, 40, 45.
We also note that the ratio of the ruling of the Special Bench in the case of Ind-Sphinx Precision Pvt. Ltd. v. CCE, Chandigarh also would support the case of the appellants. In the above circumstances, the impugned order is set aside and the appeal allowed.
Pronounced and dictated in the open Court