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Issues:
Challenge to the legal propriety of tariff values under Central Excises and Salt Act, 1944. Analysis: The appellant, the Managing Director of a company, challenged the tariff values notified under Section 3(2) of the Central Excises and Salt Act, 1944, as not being in accordance with Section 4. The duty on sugar is levied ad valorem based on the rates set forth in the First Schedule, with the Central Government empowered to fix tariff values for the purpose of levying excise duty. Section 4 determines the value of the article chargeable to duty based on wholesale cash price or price at which the article is sold or capable of being sold. The appellant argued that the notified tariff values were higher than justified by the actual realization by the factory. The respondent countered that the tariff values reflect the average realization by sugar factories in the country and are determined by a Committee appointed by the Central Government, considering price data and clearances from the previous month. The Central Government aims to align tariff values with average actual all India prices, following an elaborate procedure to fix prices for free market sugar. The Court found merit in the appellant's contention, stating that Section 4 mandates the wholesale price for an article to be the actual price at which the article is sold or capable of being sold. The tariff values fixed on the average actual all India prices basis did not comply with Section 4 requirements. The notifications setting tariff values at Rs. 130 and Rs. 125 per quintal for sugar were not in accordance with Section 4 and could not serve as a legal basis for levying duty on sugar. Consequently, the Court directed that the tariff value for ad valorem charge on free sugar from the appellant's factory be fixed in line with Section 4. No other directions were provided, and the appellant was awarded costs throughout, including counsel's fee of Rs. 250.
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