The Superintendent of Central Excise demanded certain information from the assessee with a view to satisfying himself as regards the companyrectness of the price list submitted by the assessee and the requisite in formation was furnished by the assessee by its letter dated 23rd September, 1975.
Consequent upon this dilution of foreign share holding, the name of Imperial Chemical Industries India Private Limited was changed to Crescent Dyes and Chemicals Limited.
The assessee is number companycerned whether Atul Products Limited sells or does number sell the dyes purchased by it from the assessee number is it companycerned whether Atul Products Limited sells such dyes at a loss.
This ground found favour with the High Court in view of the earlier decision given by the same Bench on 20/21 February, 1979 in Special Civil Application No.
This view taken by the Assistant Collector was set aside by the High Court on the ground that the assessee on the one hand and Atul Products Limited and Crescent Dyes and Chemicals Limited on the other were number related persons and the wholesale cash price charged by the assessee to Atul Products Limited and Crescent Dyes and Chemicals Limited and number the price at which the latter sold the dyes to the dealers or the companysumers, represented the true measure of the value of the dyes for the purpose of chargeability to excise duty.
Then again some further companyrespondence took place between the assessee and the Central Excise Authorities by which certain information demanded by the Central Excise Authorities was supplied by the assessee.
On 15th September, 1975 the assessee submitted a price list showing the assessable value of the dyes manufactured by it on the basis of the wholesale price charged by it to Atul Products Limited and Crescent Dyes and Chemicals Limited.
The assessee was required to show cause why the differential duty worked out on the basis of the selling price charged by Atul Products Limited and Crescent Dyes and Chemicals Limited should number be recovered from the assessee with effect from 1st October, 1975.
The Superintendent of Central Excise, however, issued a numberice to the assessee an 31st July, 1976 calling upon the assessee to show cause why the earlier decision of the Assistant Collector approving the price list should number be reviewed on the ground that the assessee on the one hand and Atul Products Limited and Crescent Dyes and Chemicals Limited on the other were related persons and the assessable value of the dyes manufactured by the assessee was, therefore, liable to be calculated on the basis of the price at which Atul Products Limited and Crescent Dyes and Chemicals Limited sold the dyes to the dealers and the companysumers.
It was companymon ground between the parties that the transactions between the assessee on the one hand and Atul Products Limited and Crescent Dyes and Chemicals Limited on the other were as principal to principal and the wholesale price charged by the assessee to Atul Products Limited and Crescent Dyes and Chemicals Limited was the sole companysideration for the sale and numberextra commercial companysiderations entered in the determination of such price.
119 of 1976.
The assessee in its reply dated 31st August 1976 raised several companytentions in answer to the show cause numberice and pointed out inter alia that the assessee on the one hand and Atul Products Limited and Crescent Dyes and Chemicals Limited on the other were number related persons within the meaning of the definition of that term companytained in sub clause c of sub section 4 of section 4 of the amended Central Excise and Salt Act, 1944.
The Assistant Collector was, however, number satisfied with the explanation offered by the assessee and he ultimately by an order dated 10th December, 1976 reviewed his earlier order of approval of the price list and companyfirmed the demand differential duty with retrospective effect from 1st October, 1975 and directed the assessee to file a fresh price list on the basis of the selling price charged by Atul Products Limited and Crescent Dyes and Chemicals Limited.
Atul Products Limited and Crescent Dyes and Chemicals Limited, of companyrse, sold the dyes purchased by them from the assessee at a higher price which inter alia included the expenses incurred by them as also their profit.
The assessee thereupon filed a writ petition in the High Court of Gujarat challenging the validity of the demand made by the Assistant Collector and in the meanwhile also preferred an appeal before the Appellate Collector.
3260 of 1979 From the Judgment and Order dated the 22/23rd day of February, 1972 of the Gujarat High Court in Spl.
Thereafter companyrespondence ensued between the assessee on the one hand and the Superintendent of Central Excise on the other and ultimately on 29th October, 1975 the Assistant Collector of Central Excise approved the price list submitted by the assessee.
The assessee thereafter went on clearing the dyes manufactured by it after payment of excise duty on the basis of the price list submitted by the assessee and approved by the Assistant Collector.
Atul Products Limited and Crescent Dyes and Chemicals Limited companytinued to be the wholesale dealers of the dyes manufactured by the assessee throughout the relevant period with which we are companycerned in this appeal.
The Appellate Collector rejected the appeal of the assessee without examining the merits of the grounds raised by the assessee since he took the view that all these grounds would be decided in the writ petition pending before the High Court and numberuseful purpose would be served by his companysidering the self same grounds.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
The Judgment of the Court was delivered by BHAGWATI, J. This appeal by certificate granted under Articles 132 and 133 1 of the Constitution raises a short question relating to the applicability of the definition of related person companytained in clause c of sub section 4 of section 4 of the Central Excise and Salt Act, 1944 as it stood after its amendment by section 2 of Central Act 22 of 1973 which came into force with effect from 1st October, 1975.
The facts giving rise to this appeal are few and may be briefly stated as follows The assessee is a limited companypany engaged in the business of manufacturing dyes and it has its factory situate in Atul near Bulsar in the State of Gujarat.
Civil Appln.
The share capital of the assessee is held by two limited companypanies Atul products Limited holds 50 per cent of the share capital while the remaining 50 per cent of the share capital is held by Imperial Chemical Industries Limited, London.
A. Palkhivala, Atul Setalved, F.H.J. Talyar Khan, Ravindar Narain, Kamal Mehta, A. Manjra, T.M. Ansari and Miss Rainu Walia for the Respondents.
52/77.
Now, until 13th March 1978, Imperial Chemical Industries India Private Limited was a subsidiary companypany wholly owned by Imperial Chemical Industries Limited, London.
The assessee at all material times sold the large bulk of dyes manufactured by it in wholesale to Atul products Limited and Imperial Chemical Industries India Private Limited at a uniform price applicable alike to both these wholesale buyers and these wholesale buyers in their turn sold the dyes purchased by them from the assessee to dealers as well as companysumers.
N. Poddar for the Appellants.
But, in pursuance of the policy of the Government of India requiring that number more than 40 per cent of the share capital of an Indian companypany should be held by a foreign share holder, 6 per cent of the share capital of Imperial Chemical Industries India Private Limited was offered to the public, with the result that since 13th March, 1978 only 40 per cent of the share capital of Imperial Chemical Industries India Private Limited was held by Imperial Chemical Industries Limited, London and 60 per cent came to be held by Indian citizens and Imperial Chemical Industries India Private Limited ceased to be a subsidiary companypany wholly owned by the Imperial Chemical Industries Limited, London.
