Case: Collector of Central Excise Vs. Simac India (P) Ltd

3. The assessee manufactures hand knitting machines and sells them, in bulk, to M/s. Singer Sewing Machine Company (for short, "M/s. Singer"). It claimed benefit of the notification. The superintendent, central excise, issued a notice dated 16th July, 1976 to the assessee to show cause as to why the benefit of the exemption notification should not be denied to it. On 3rd January, 1979, the assistant collector of central excise, Thane, division I, accepted the contention of the assessee extending the benefit of the notification. However, the collector (appeals) issued a show cause notice on 24 December, 1979 calling upon the assessee to show cause as to why the benefit of the notification should not be denied and consequentially, made a demand for the differential duty of Rs. 18,55,570.69 by revising the order of the assistant collector. On appeal, against the order of the collector (appeals), the tribunal, by the impugned order, held that the assessee was entitled to the benefit of the exemption notification. It is against that order, the revenue is in appeal before us.

Court's reasoning:
6. A perusal of the exemption notification, extracted above, shows that where the price of the goods, falling under item 68 of the first schedule, assessed under S.4 of the Central Excise and Salt Act, 1944 and the rules made thereunder is more than the invoice price, the notification grants exemption in respect of so much of the duty of excise leviable on it as is in excess of the duty calculated on the basis of invoice price charged by the manufacturer from the sale. In the circumstances mentioned in Clause (iv), the benefit of the exemption would be lost when the invoice price is influenced by any commercial, financial or other relationship, whether by contract or otherwise, between the manufacturer or any person associated in business with the manufacturer and the buyer or any person associated in business with the buyer, other than the relationship created by sale of the aforesaid goods.A perusal of the above extracts of the order under appeal shows that the tribunal was not very clear about the import of the exemption notification.This portion of the order under appeal ignores the evidence referred to by the collector (appeals) in paragraph (7) of his order. We may also note that the contention of the assessee that in view of the conclusion arrived at by the tribunal, the other contentions, namely, the power to issue the notice and the question of limitation, which were urged before it, were not considered.