1971 (12) TMI 44 - HC - Central Excise

Summary

Issues:
Interpretation of Section 4 and Explanation under Central Excises and Salt Act, 1944 for determining the value of excisable goods.
Validity of notifications exempting excise duty on footwear.
Difference in interpretation between High Court at Calcutta and Patna High Court regarding the determination of value for exemption from duty.

Analysis:

1. Interpretation of Section 4 and Explanation:
The appeal raised concerns regarding the interpretation of Section 4 and the Explanation under the Central Excises and Salt Act, 1944 for determining the value of excisable goods. The appellant contended that the learned Judge erred in not deducting the trade discount allowance and the amount of duty payable from the wholesale cash price before determining the value of the article. The argument focused on the necessity to calculate the value first to ascertain if it falls below a certain threshold for exemption under the notification.

2. Validity of Exemption Notifications:
The case involved three crucial notifications, particularly G.S.R. 360 and G.S.R. 804, which exempted excisable goods, specifically footwear, from excise duty. The third notification dated 24th July, 1967, exempted footwear with a value not exceeding Rs. 500 per pair from excise duty. The central issue revolved around the correct interpretation of the term "value" in this exemption notification and whether the principles of Section 4 should apply to determine the value for exemption purposes.

3. Interpretation Discrepancy between High Courts:
A significant aspect of the judgment was the discrepancy in interpretation between the High Court at Calcutta and the Patna High Court regarding the determination of value for exemption from duty. The Patna High Court emphasized that duty should be deducted from the wholesale price before considering exemption, contrary to the Calcutta High Court's view. The Calcutta High Court held that the determination of value for exemption should occur after the duty has been paid and calculated, not based on the deemed value under Section 4 for duty purposes.

4. Conclusion:
The Chief Justice dismissed the appeal, upholding the judgment of the learned Judge in its entirety, including observations on the cross-objection. The conclusion emphasized that the value for exemption from duty should be the actual value after duty payment, as per Rule 8 of the Central Excise Rules. The judgment highlighted the distinction between the value for duty determination under Section 4 and the value for exemption under the notification. The decision clarified that the exemption is granted only after the duty has been levied, and the goods are deemed excisable and leviable with duty.

5. Costs and Stay Order:
The judgment concluded by dismissing the cross-objection and ruling no order as to costs. Additionally, a stay of operation was granted until a specified date. The detailed analysis provided clarity on the interpretation of legal provisions and notifications, resolving the issues raised in the appeal effectively.