1976 (6) TMI 69 - HC - Central Excise

Summary

Issues Involved:

1. Inclusion of hour meter and wheel weights in the assessable value of tractors for excise duty purposes.
2. Compliance with the Tractors (Price Control) Order, 1967.
3. Interpretation of Section 4 of the Central Excises and Salt Act, 1944.
4. Distinction between motor vehicles and their parts/accessories under Item Nos. 34 and 34A of the Central Excise Tariff.
5. Alleged violation of Article 14 of the Constitution.

Summary:

1. Inclusion of hour meter and wheel weights in the assessable value of tractors for excise duty purposes:
The petitioners challenged the orders of the Assistant Collector and the Collector of Excise, which included the value of hour meters and wheel weights in the assessable value of tractors. The court held that "hour meters and wheel weights" are not essential components of tractors and should not be included in the assessable value for excise duty purposes. The court emphasized that excise duty should be levied only on the manufactured goods, i.e., the 'tractor' as defined under Item 34(3a), and not on additional accessories fitted at the option of the purchaser.

2. Compliance with the Tractors (Price Control) Order, 1967:
The court noted that the price of tractors, including specified accessories, was fixed by the Central Government under the Tractors (Price Control) Order, 1967. The specified accessories did not include hour meters and wheel weights. Therefore, including their value in the assessable value of tractors contravened the provisions of the Price Control Order.

3. Interpretation of Section 4 of the Central Excises and Salt Act, 1944:
The court interpreted Section 4 of the Act, stating that the assessable value of excisable goods should be the price at which the goods are sold. Since the hour meters and wheel weights were not essential parts of the tractors and were fitted at the option of the purchasers, their value should not be included in the assessable value of the tractors.

4. Distinction between motor vehicles and their parts/accessories under Item Nos. 34 and 34A of the Central Excise Tariff:
The court highlighted the distinction between motor vehicles (including tractors) and their parts/accessories under Item Nos. 34 and 34A. It was noted that parts and accessories, such as hour meters and wheel weights, were exempt from excise duty under Item 34A. Including their value in the assessable value of tractors would indirectly circumvent this exemption, which is impermissible.

5. Alleged violation of Article 14 of the Constitution:
The petitioners argued that the actions of the Assistant Collector and the Collector were discriminatory and violated their fundamental rights under Article 14 of the Constitution. However, the court did not find it necessary to address this contention in detail, given its findings on the other issues.

Conclusion:
The court allowed the petition, quashing the impugned orders of the Assistant Collector and the Collector of Central Excise. The rule was made absolute in terms of prayers (a), (b), and (c), including the order dated 6-2-1973. The respondents were directed to pay the costs of the petition. The petitioners were instructed not to revoke the bank guarantee for six weeks from the date of the judgment.