1978 (10) TMI 45 - HC - Central Excise

Summary

Issues Involved:
1. Inclusion of the value of containers and freight in the assessment of excise duty for Vanaspati.
2. Maintainability of the petition under Article 226(3) of the Constitution.

Detailed Analysis:

Issue 1: Inclusion of the Value of Containers and Freight in the Assessment of Excise Duty for Vanaspati

Background:
The petitioner, a limited company manufacturing hydrogenated oil (Vanaspati), challenged the inclusion of the value of metal containers and freight charges in the assessment of excise duty. The excise duty on Vanaspati is levied under Item 13 of the First Schedule of the Central Excises and Salt Act, 1944, and is assessed ad valorem.

Petitioner's Contention:
The petitioner argued that the value for ad valorem duty should exclude the value of the containers and the cost of freight, as per the definitions in Sections 2(d) and 2(f) of the Act. The petitioner contended that the term "vegetable product" does not imply Vanaspati packed in containers. The duty should be charged on the price of the vegetable product alone, excluding any post-manufacturing costs like packing and freight.

Respondent's Contention:
The respondents argued that the process of manufacture includes packing and tinning, as Vanaspati is commonly sold in containers. Therefore, the value of the containers should be included in the excisable value. They cited Section 2(f), which defines "manufacture" to include processes incidental or ancillary to the completion of a manufactured product.

Court's Analysis:
The court analyzed the definitions and provisions of the Act:

- Section 2(d): Defines "excisable goods" as goods specified in the First Schedule.
- Section 2(f): Defines "manufacture" and includes specific processes for certain goods but does not explicitly include packing for Vanaspati.
- Item 13 of the First Schedule: Specifies that the duty is on the vegetable product, which is defined as hardened vegetable oil or fat for human consumption, without mentioning containers.

The court referred to several precedents, including the Supreme Court's rulings in *A.K. Roy v. Voltas Ltd.*, *Union of India v. Delhi Cloth and General Mills*, and *Atic Industries Ltd. v. H.H. Dave*. These cases established that excise duty is levied on the manufacturing cost and profit, excluding post-manufacturing costs like packing and freight.

The court concluded that the value of containers and freight should not be included in the excisable value of Vanaspati. The duty is to be assessed on the manufacturing cost and profit alone.

Issue 2: Maintainability of the Petition under Article 226(3) of the Constitution

Respondent's Argument:
The respondents argued that the petition should not be entertained due to the availability of an alternative remedy under the Act, which provides for appeals and revisions against assessment orders.

Petitioner's Argument:
The petitioner contended that the order challenged is not a specific assessment order but a general order rejecting the petitioner's price list. Filing appeals against every assessment would be repetitive and inefficient. The petitioner cited a decision of the High Court in *Gwalior Rayon Silk Mfg. Co. Ltd. v. V.K.K. Khosla*, which held that if no alternative remedy is available for the specific redress sought, the bar under Article 226(3) does not apply.

Court's Analysis:
The court agreed with the petitioner, noting that the order in question affects multiple assessments and raises a general question of law. The court found that there was no specific remedy available to address this recurring legal issue. Therefore, the bar under Article 226(3) was not applicable.

Conclusion:
The petition was allowed. The court quashed the order of the Assistant Collector, Central Excise, and directed that the value for excise duty assessment should exclude the price of containers and freight charges. The court also held that the petition was maintainable under Article 226 of the Constitution, as there was no adequate alternative remedy available for the specific legal issue raised.