1976 (12) TMI 180 - HC - Central Excise

Summary

Issues involved: Determination of assessable value u/s 4 of the Central Excises and Salt Act, 1944.

Summary:
The judgment dealt with the determination of assessable value u/s 4 of the Central Excises and Salt Act, 1944, specifically focusing on the prices charged by the petitioner for sale to distributors and the treatment of post-manufacturing expenses in calculating the wholesale cash price. The petitioner, engaged in manufacturing and sale of cigarettes and smoking tobaccos, submitted price lists under the Self Removal Procedure, claiming that certain expenses like marketing, distribution, advertising, freight, and interest were post-manufacturing and should not be included in the assessable value. The petitioner argued that post-manufacturing expenses and profit should be deducted to determine the wholesale cash price for excise duty levy u/s 4 of the Act.

The Court referred to Section 4 of the Act, emphasizing that excise duty is levied on manufacturing costs and profit, excluding post-manufacturing expenses like selling profit. Citing the Supreme Court decision in A.K. Roy v. Voltas Ltd., the Court highlighted that the wholesale price should be based on cash payment at the factory gate, excluding post-manufacturing costs. The Court agreed with the Karnataka High Court's view that wholesale price should only include manufacturing costs and profit, excluding selling costs and profit.

Regarding the absence of a wholesale market at the factory location, the Court noted that the wholesale cash price should be determined at the nearest market where such exists, considering only manufacturing costs. The Court rejected the argument that subsequent Supreme Court decisions conflicted with the principles laid down in Voltas's case, emphasizing that manufacturing cost and profit should not be burdened with post-manufacturing expenses. The Court directed the authorities to examine the petitioner's claimed post-manufacturing expenses and allow deductions if found valid, quashing previous orders and instructing the respondents to finalize the price list accordingly.

In conclusion, the petitioner's petition was allowed, and the authorities were directed to ascertain and consider the post-manufacturing expenses claimed by the petitioner in determining the assessable value u/s 4 of the Act.