1970 (4) TMI 152 - HC - Central Excise

Summary

Issues Involved:
1. Basis of assessment for Ciba Atul Dyes.
2. Jurisdiction of excise authorities to include repacking charges in assessable value.
3. Validity of demand notices beyond the three-month limitation period.
4. Violation of natural justice principles by the Collector's order dated April 3, 1964.

Issue-wise Detailed Analysis:

1. Basis of Assessment for Ciba Atul Dyes:
The petitioner contended that the assessment should be based on the price charged by the company to Ciba, not on the prices at which Ciba sold the dyes. The court referred to its decision in Special Civil Application No. 1279 of 1966, concluding that since Ciba was the sole distributor and there was no wholesale market at the time of removal, the assessment should be based on Ciba's wholesale prices. Thus, the first contention was dismissed.

2. Jurisdiction of Excise Authorities to Include Repacking Charges:
The court examined whether repacking charges by Ciba should be included in the assessable value. For Atul Dyes, sold in bulk to various wholesalers, the assessable value should be based on the company's price list at the factory site, excluding repacking charges by Ciba. For Ciba Atul Dyes, since Ciba was the sole purchaser, the second part of Section 4(a) applied, considering the nearest market prices. The court found no justification to include repacking charges in either case, as the excisable article's value should be determined at the time of removal from the factory, not after subsequent repacking by Ciba. The court held that including repacking charges was ultra vires and outside the scope of Section 4(a).

3. Validity of Demand Notices Beyond the Three-Month Limitation Period:
The petitioner argued that demand notices were incompetent as they were issued beyond the three-month limitation period under Rule 10. The court did not delve into this issue in detail, as the second contention regarding repacking charges already succeeded, rendering this point moot.

4. Violation of Natural Justice Principles:
The petitioner claimed that the Collector's order dated April 3, 1964, violated natural justice principles as no personal hearing was given, and the authority sought directions from higher authorities. The court noted that the earlier orders sought to change the assessment basis by including packing charges, and the final orders were merely consequential. The court emphasized that the existence of an alternative remedy does not preclude the exercise of jurisdiction under Article 226, especially when the assessment basis is ultra vires. Thus, the preliminary objection raised by Mr. Vakil was dismissed.

Conclusion:
The court allowed the petition, quashing the impugned orders, demand notices, show cause notices, and final orders of July 1964, insofar as they sought to reopen the assessment by including Ciba's packing charges. The rule was made absolute with costs.