2013 (3) TMI 429 - HC - Central Excise

Writ Petition - Petitioner manufacturing sponge iron, which is excisable commodity. Petitioner has challenged the Trade Notice issued by Commissioner of Central Excise & Customs, by which it has been declared that duty is required to be paid by the assessee at the time of clearance of goods from factory gate even for those goods which are sold through depot and the duty shall be levied at the price declared at depot. According to petitioner, as per section 4(2) the excise duty cannot be levied on the goods on transportation from the place of removal to the place of delivery, which has been made explicitly clear by the Hon ble Supreme Court in the detailed judgment delivered in the case of Union of India & Ors. v. Bombay Tyre International Ltd. & Ors. reported in 1983 (10) TMI 51 - SUPREME COURT OF INDIA, NEW DELHI . The petitioner has also challenged the vires of Section 4(4)(b)(iii) inserted by Section 74 of the Finance Act, 1996 as illegal and ultra vires of Entry 84 of List-I of Seventh Schedule of Constitution, as, according to the petitioner, the said Entry authorizes and gives power for levy of imposition of duty on goods manufactured or produced in India. It has been contended that said provision is ultra vires of the charging Section i.e., Section 3 of the Act. Held that - After considering the submissions and in the judgement of passed by the Hon ble Supreme Court in Union of India & Ors. v. Bombay Tyre International Ltd. & Ors. reported in 1983 (10) TMI 51 - SUPREME COURT OF INDIA, NEW DELHI . In view of the above reasons, when there is statutory provision, any order or circular cannot nullify that statutory provision. Court are of the considered opinion that the Trade Notice issued by Commissioner of Central Excise & Customs is illegal and contrary to the statutory provisions of Section 4(2) of the Act of 1944 and runs contrary to the law laid down by the Hon ble Supreme Court. Therefore, the writ petition of the petitioner deserves to be allowed on this Count. Hence the writ petition is allowed

Summary

Issues:
Challenge to Trade Notice No. 19/96 dated 24th July, 1996
Validity of Section 4(4)(b)(iii) inserted by Section 74 of the Finance Act, 1996
Interpretation of Section 4 of the Central Excise Act, 1944

Analysis:
The petitioner challenged Trade Notice No. 19/96, issued by the Commissioner of Central Excise & Customs, Jamshedpur, declaring duty payment at the time of clearance of goods from the factory gate, even for goods sold through a depot. The petitioner also contested the legality of Section 4(4)(b)(iii) inserted by the Finance Act, 1996, as ultra vires of Entry 84 of List-I of the Constitution, authorizing duty imposition on goods manufactured in India. The petitioner argued that the amendment misinterpreted the charging provisions, affecting the levy of excise duty on transportation from factory gate to depot.

The petitioner cited the Supreme Court's judgment in Union of India v. Bombay Tyre International Ltd., emphasizing the deduction of transportation costs from the wholesale cash price for excise duty calculation. Despite the amendment in 1996, the Supreme Court in VIP Industries Ltd. v. Commissioner of Customs & Central Excise, Aurangabad, affirmed the exclusion of transportation charges in excise duty valuation. The court noted that statutory provisions supersede any contrary orders or circulars, ruling Trade Notice No. 19/96 as illegal and against Section 4(2) of the Act and the Supreme Court's precedent.

The court analyzed the interpretation of the Central Excise Act, focusing on the determination of excisable article value based on the wholesale price charged by the manufacturer. It clarified that the point of collection for excise duty is as declared by the statute, emphasizing that transportation costs should be excluded from the valuation. The court concluded that the Trade Notice was unlawful and quashed it, upholding the petitioner's challenge. The court's earlier interim order directed the petitioner to maintain excise duty accounts as per the statutory provision, ensuring no realization until further orders.

In conclusion, the court allowed the writ petition, nullifying Trade Notice No. 19/96 and emphasizing the adherence to statutory provisions and Supreme Court rulings in excise duty valuation and collection.