2005 (3) TMI 759 - HC - Central Excise

Summary

Issues Involved:
1. Determination of the correct assessable value under Section 4 of the Central Excise and Salt Act, 1944.
2. Deductibility of various post-manufacturing expenses from the assessable value.
3. Legality of the final assessment order dated 25th May 1988.
4. Compliance with directions issued by the High Court in the earlier round of litigation.

Detailed Analysis:

1. Determination of the correct assessable value under Section 4 of the Central Excise and Salt Act, 1944:
The petitioner, a company engaged in the manufacture of dry cell batteries, disputed the correct assessable value of its product under Section 4 of the Act. The assessable value should exclude post-manufacturing costs such as freight, marine insurance, advertising, sales promotion, depot expenses, central sales tax, royalty, packing expenses, and interest.

2. Deductibility of various post-manufacturing expenses from the assessable value:
The petitioner filed price lists deducting the aforementioned expenses as post-manufacturing costs. The respondent disallowed these deductions, leading to a demand notice for Rs. 44,02,120.00 as short-levied excise duty. The High Court had earlier directed the respondent to permit the petitioner to submit revised statements of deductions for proper determination of excise duty liability.

3. Legality of the final assessment order dated 25th May 1988:
The petitioner challenged the final assessment order dated 25th May 1988, which disallowed deductions for royalty, interest on average stock of finished goods at depot, interest on receivables, interest at 1.5% as wholesale credit prices (prior to 8.3.77), trade discount (prior to 5.3.86), and additional cash discount (prior to 1.8.80). The High Court found that the respondent had erred in disallowing certain deductions, particularly interest on receivable goods from CSD and DGS&D, which should be allowed as per the Supreme Court's decision in the Madras Rubber Factory case.

4. Compliance with directions issued by the High Court in the earlier round of litigation:
The High Court had directed the respondent to re-examine the petitioner's claims in light of various Supreme Court decisions and permit the petitioner to submit revised price lists. The respondent's disallowance of certain deductions for periods prior to specified dates was found to be unjustified, as the petitioner was entitled to submit revised price lists and claims for deductions.

Judgment:
The High Court upheld the disallowance of deductions for royalty and interest on average stock of finished goods at depot. However, it quashed the disallowance of deductions for interest at 1.5% as wholesale credit prices (prior to 8.3.77), trade discount (prior to 5.3.86), additional cash discount (prior to 1.8.80), and interest on receivable goods from CSD and DGS&D. The respondent authorities were directed to revise the final demand in accordance with the judgment within four weeks. The petition was allowed to the extent specified, with no order as to costs.