1974 (7) TMI 119 - HC - Central Excise

Summary

Issues Involved:
1. Provisional vs. Final Assessment of Excise Duty
2. Validity of Determination of Wholesale Cash Price by the Assistant Collector

Comprehensive, Issue-wise Detailed Analysis:

1. Provisional vs. Final Assessment of Excise Duty
The primary issue was whether the excise duty paid by the petitioner at the time of removal of goods from his factory was provisional or final. The court examined whether the Central Excise Authorities were reopening final assessments or making final assessments of goods removed after provisional duty payments. The Assistant Collector referred to the special procedure under Chapter VIIA of the Central Excise Rules, 1944, which began applying to rubber products from June 1, 1968. Under this procedure, manufacturers determined duty based on value approved by the Central Excise Authority and cleared goods on payment of the duty under proper Gate Pass. Monthly returns were submitted for final assessment by the Central Excise Officer. The Assistant Collector relied on Rule 9B, arguing that the goods cleared by the petitioner were provisionally assessed. The court noted that the Assistant Collector had jurisdiction to determine the provisional nature of the assessments, and the writ court could not review these factual findings.

2. Validity of Determination of Wholesale Cash Price by the Assistant Collector
The second issue was whether the determination of the wholesale cash price by the Assistant Collector was valid and in accordance with law. The Assistant Collector determined that the petitioner's goods were sold under the trade marks 'Dunlop' and 'Mansfield,' and fixed the assessable value based on the wholesale price at which Dunlop Rubber Company (India) Limited sold similar hose pipes. The Assistant Collector found that the petitioner owned the Associated Rubber Works and Rub Company, through which the goods were sold, and these transactions were not at arm's length, thus not representing the true wholesale cash price. The court highlighted the Supreme Court's observations in A.K. Roy v. Voltas Limited, which emphasized that the wholesale cash price should include only manufacturing cost and profit, excluding post-manufacturing costs and profits. The Assistant Collector failed to apply these principles, leading to an error apparent on the face of the record. The court quashed the assessment order but allowed the Assistant Collector to make a fresh determination of the wholesale cash price and reassess the excise duty in accordance with the law.

Conclusion:
The court made the Rule absolute in part, quashing the assessment order dated May 25, 1971, of the Assistant Collector. A writ of Mandamus was issued, commanding the respondents to refrain from making any fresh assessment of excise duty on certain goods but permitting fresh assessments on others in accordance with the law. No order as to costs was made.