2015 (11) TMI 961 - SC - Central Excise

Valuation of goods - part of sugar was to be sold at controlled rates to be fixed by the Government - Section 4 of the Central Excises and Salt Act, 1944 - Held that - As per clause (a) of sub-Section (1) of Section 4, the duty which is payable is on a normal price of the goods i.e. price at which the goods are ordinarily sold by the assessee to a buyer. As pointed out above, the High Court had passed interim orders permitting the assessee to charge higher price and thereafter at that price the goods were normally sold by the assesse to the FCI as well as other buyers. - it is clear that the only price that was spoken about even by the interim orders was the price fixed under any law for the time being in force and thus an interim order fixing the higher price would also be an order which fixes a price under any law for the time being in force . - Order of Tribunal is set aside - Decided in favour of Revenue.

Summary

Issues:
1. Dispute over differential excise duty on sugar sales during 1978-1980.
2. Interpretation of Section 4 of the Central Excises and Salt Act, 1944.
3. Impact of interim orders allowing higher prices on excise duty calculation.
4. Controversy regarding notified prices under the Sugar-cane (Control) Order.

Issue 1:
The case involved a dispute over the excise duty payable on sugar sales by the respondent during the period from March 1978 to November 1980. The respondent, a sugar manufacturer, had charged a higher price based on interim orders from the High Court, but paid excise duty only on the rates fixed by the Government. Consequently, a show cause notice was issued claiming a differential duty. The Assistant Commissioner confirmed the demand, leading to appeals and counter-claims regarding the actual amount payable.

Issue 2:
The interpretation of Section 4 of the Central Excises and Salt Act, 1944 was crucial in determining the excise duty calculation. Section 4 outlined the valuation of excisable goods for duty purposes, emphasizing the normal price at which goods are ordinarily sold by the assessee. The respondent argued that since the price was fixed by the Government under the Essential Commodities Act, the excise duty was correctly paid based on the declared price. However, the Court found this contention to be misconceived.

Issue 3:
The impact of interim orders allowing higher prices on excise duty calculation was significant. The High Court had permitted the respondent to charge higher prices due to a dispute over notified prices under the Sugar-cane (Control) Order. These interim orders influenced the pricing at which the goods were sold, leading to a discrepancy in excise duty payment. The Tribunal's decision was based on the historical context of these interim orders and their legal implications on duty calculation.

Issue 4:
The controversy regarding notified prices under the Sugar-cane (Control) Order stemmed from the introduction of Clause 5-A and the Bhargava Commission Report of 1974. The dispute revolved around whether the notified prices adequately accounted for excess sale realizations of free-sale sugar. Various judgments, including the final decision in Malaprabha Co-operative Sugar Factory Ltd. case, clarified that the notified price should consider the higher prices permitted by interim orders, ultimately impacting the excise duty calculation.

In conclusion, the Supreme Court set aside the Tribunal's order and allowed the appeal, emphasizing the legal principles governing excise duty valuation and the impact of interim orders on pricing and duty calculation in the sugar industry during the relevant period.