1980 (4) TMI 119 - HC - Central Excise

Pumps - Determination of assessable value - Valuation - Exclusion of excise duty paid on parts - Alternative remedy

Summary

Issues:
1. Whether excise duty on electric motors should be included in the assessable value of mono-block pumping sets.
2. Interpretation of section 4 of the Central Excises and Salt Act regarding the exclusion of excise duty from the assessable value.
3. Maintainability of the petition without approaching the Central Government against the appellate orders.

Analysis:
1. The petitioner manufactured mono-block pumping sets with electric motors, both excisable goods. The dispute arose when the Assistant Collector of Central Excise demanded excise duty for a specific period. The petitioner challenged the orders, arguing whether excise duty on electric motors should be included in the assessable value of pumping sets. The court examined a notification granting exemptions for power-driven pumps fitted with duty-paid electric motors, concluding that excise duty on electric motors cannot inflate the assessable value of pumping sets.

2. The court analyzed section 4 of the Central Excises and Salt Act, emphasizing the definition of 'value' and the exclusion of excise duty from assessable value. The pre-amendment section allowed deductions only for trade discounts and duty payable at the time of removal. The amended section clarified that excise duty should not be part of the value of excisable goods. The court interpreted 'goods' and 'article' to include a part thereof, asserting that excise duty on electric motors attached to pumping sets cannot be part of the assessable value.

3. The respondent raised a preliminary objection on the maintainability of the petition, arguing that the petitioner should have approached the Central Government before filing the petition. The court rejected this objection, stating that the issue involved the interpretation of relevant sections and the exemption notification. The court quashed the impugned orders, directing refunds if any short levy was paid. The judgment highlighted the importance of not inflating assessable values with excise duty on components integral to the main product.

Editor's Comments:
The assessment of excise duty on electric motors in the context of mono-block pumping sets was the crux of this case. The court's interpretation of the law emphasized the integral relationship between electric motors and pumping sets, leading to the exclusion of excise duty on electric motors from the assessable value of the sets. The judgment underscored the significance of understanding the distinct identity and essential nature of components in determining excise duty liabilities.