1980 (12) TMI 53 - HC - Central Excise

Summary

Issues:
Challenge to show cause notice regarding excise duty on additional charges for glass and glasswares clearance.

Analysis:
1. The petitioner, a glass company, challenged a show cause notice by the Superintendent of Central Excise regarding the declaration of assessable values and additional charges on goods cleared during a specific period. The notice alleged short-levy of duties and required the petitioner to justify the additional amounts charged. The petitioner contested the notice on the grounds that the charges were not part of manufacturing cost or profit under the unamended Section 4 of the Central Excises and Salt Act, 1944.
2. The Court noted that the petitioners had not received a final order from the department and could only challenge the show cause notice if there were violations of natural justice, statutory provisions, or jurisdiction by the authorities without a final order being passed.
3. The petitioner argued that the additional charges for transportation, packing, loading, and unloading could not form the basis for levying excise duty. The Court analyzed Section 4 of the Act, which determines the value for duty calculation. It emphasized that the real value after duty payment should be considered for exemptions, not the deemed value under Section 4. The explanation to the section clarified that only trade discounts and excise duty were deductible in determining the article's price.
4. The Court examined precedents, including the Bata Shoe Company case, to establish that post-manufacturing charges like transportation and packing costs should not be considered part of manufacturing cost or profit for excise duty purposes. It cited decisions from other High Courts that supported excluding packing and transportation costs from the assessable value. Ultimately, the Court set aside the show cause notice, finding it without jurisdiction and unsustainable.

In conclusion, the Court ruled in favor of the petitioner, setting aside the show cause notice and restraining the respondents from taking further action. The judgment highlighted the distinction between manufacturing costs and post-manufacturing charges for excise duty purposes, emphasizing the exclusion of certain charges from the assessable value.