1978 (3) TMI 104 - HC - Central Excise

Summary

Issues:
1. Assessment of excise duty on cosmetics and toilet preparations.
2. Inclusion of equalized freight charges in the assessable value.
3. Validity of Government order rejecting revision application.

Analysis:

Issue 1: Assessment of excise duty on cosmetics and toilet preparations
The case involves a company manufacturing cosmetics and toilet preparations subject to Central Excise duty under item 14 of the Central Excises and Salt Act, 1944. The company submitted a revised price list based on the principles of a Supreme Court judgment. The Assistant Collector of Central Excise required the inclusion of equalized freight charges in the assessable value, leading to a dispute regarding the assessment of excise duty.

Issue 2: Inclusion of equalized freight charges in the assessable value
The Assistant Collector contended that equalized freight charges should be considered an integral part of the assessable value, demanding duty on clearances where such charges were not included. The company argued that charging uniform freight for all consignments did not necessarily mean it should be included in the assessable value for excise duty purposes. The court considered the nature of freight charges and post-manufacturing operations, ultimately ruling that freight charges incurred after manufacturing should not be included in the cost price. The court set aside the impugned order, allowing the writ petition.

Issue 3: Validity of Government order rejecting revision application
The company had appealed the Assistant Collector's order to the Appellate Collector and filed a revision application before the Government of India, both of which were rejected. The company sought to quash the Government of India's order through the writ petition. The court, after considering the arguments presented by both parties, found in favor of the petitioner, setting aside the impugned order and allowing the writ petition without costs.

In conclusion, the High Court of Madras, in the judgment delivered by Shri Mohan J., ruled in favor of the petitioner, holding that equalized freight charges should not be included in the assessable value for the purpose of determining excise duty on cosmetics and toilet preparations. The court's decision set aside the Government of India's order and allowed the writ petition, emphasizing the distinction between manufacturing costs and post-manufacturing operations such as freight charges.