MATHEW,J. - (1.) VOLTAS Ltd., the respondent here, filed a writ petition before the High Court of Bombay, Challenging the validity of the appellate order passed by the 1st appellant on 2nd May, 1967, in respect of the liability of the respondent to pay excise duty for the year 1963 and the orders of the Assistant Collector of Central Excise relating to the liability of the respondent to pay excise duty for the years, 1962, 1864, 1965 and 1986 as also the notices demanding the assessed amount of Rs. 27,57,177.19. The High Court allowed the petition. This appeal, by certificate, is against that order.
(2.) VOLTAS Ltd. is a company registered under the Companies Act. It carries on, among others, the business of manufacturing air conditions, water coolers and complanent parts thereof. It organises the sales of these articles from its head office at Bombay as also from its branch offices at Calcutta, Delhi, Madras, Bangalore, Cochin and Lucknow. From these offices it effects direct sales to consumers at list prices and the sales so effected came to about 90 to 95 per cent of its production of these articles in the factory in question during the relevant period. Apart from these sales, it also sells the articles to wholesale dealers from different parts of the country in pursuance of agreement entered into with them. The agreements with the whole sale dealer for the relevant years contained terms and conditions similar to those mentioned in Exhibit A annexed to the writ petition. The agreements provided, among other things, that the dealers should not sell the articles sold to them except in accordance with the list prices fixed by the respondent would sell them the article at the list prices less 22 per cent discount, that the dealers will not be entitled to any discount on the prices of accessories mentioned in the price schedule and that the dealers should give service to the units sold in their territory. Excise duty on the basis of ad velorem value was imposed on air conditioners, water coolers and parts of water coolers from 1st March, 1961. The respondent's case was that the list price after deducting the discount of 22 per cent allowed to the wholesale dealers would constitute the "wholesale cash price" for ascertaining the real value of the articles. This case was accepted by the excise authorities and assessments were made upto the end of 1962 on that basis.
(3.) IN April, 1964, the Superientendent of Central Excise intimated the respondent that excise duty would be assessed and levied not on the footing of the 'wholesale cash price' but on the basis of the retail price and, by his three orders dt. 5th Sept., 1964 and one dt. 10th Sept., 1964, he assessed the respondent to excise duty in respect of the sales on the footing of list prices for sale to consumers for the period from 1st Jan., 1963, to 31st Dec., 1963, and a notice of demand dt. 8th Oct., 1964, was served on the respondent calling upon it to pay the above sum. The respondent filed an appeal against the orders but that was dismissed by the 1st appellant by his order dt. 2nd May, 1967 and this was the main order that was challenged in the writ petition.;