1984 (3) TMI 69 - HC - Central Excise

Summary

Issues Involved:
1. Legality and jurisdiction of the notice issued by the Central Board of Excise and Customs under Section 35A of the Central Excises and Salt Act, 1944.
2. Determination of assessable value for excise duty purposes.
3. Entitlement to refund of excess excise duty paid.
4. Competence of the Assistant Collector to grant refund.
5. Applicability of Supreme Court judgments on the determination of assessable value.

Detailed Analysis:

1. Legality and Jurisdiction of the Notice Issued by the Board:

The petitioner challenged the notice dated 14th April 1975, issued by the Central Board of Excise and Customs, requiring the petitioner to show cause why the order granting the refund should not be set aside. The Board alleged that the order of the Assistant Collector granting the refund was not correct, legal, and proper. The petitioner contended that the notice was ex facie bad in law and wholly without jurisdiction. The court held that the Board acted without jurisdiction in issuing the impugned notice seeking to revise the order of refund. The notice was based on an erroneous interpretation of statutory provisions and a clear disregard of the principles laid down by the Supreme Court in the case of A.K. Roy v. Voltas Ltd. The grounds mentioned in the notice were found to be untenable and without substance.

2. Determination of Assessable Value for Excise Duty Purposes:

The petitioner argued that the assessable value of the goods manufactured by it should be determined based on the wholesale prices at which the goods were sold by the petitioner to its stockists/distributors, not on the prices at which the stockists/distributors sold the goods to their buyers. The Supreme Court in A.K. Roy v. Voltas Ltd. held that the value of an excisable article for the purpose of excise levy should be taken at the price at which the excisable article is sold by the assessee to a buyer at arm's length in the course of wholesale trade at the time and place of removal. The court reiterated that the wholesale cash price charged by the manufacturer to its wholesale dealers is the only relevant factor for determining the assessable value for imposition of excise duty.

3. Entitlement to Refund of Excess Excise Duty Paid:

The petitioner filed several refund applications claiming a refund of the excess excise duty realized by reason of determining the assessable value on the basis of the prices charged by the stockists/distributors from their dealers. The Assistant Collector of Central Excise sanctioned the refund. The court found that the Assistant Collector had correctly applied the principles laid down by the Supreme Court and allowed the refund based on the correct determination of the assessable value.

4. Competence of the Assistant Collector to Grant Refund:

The Board contended that the Assistant Collector did not have jurisdiction to grant the refund and that the successor Assistant Collector was not competent to reopen and revise the assessable value. The court rejected this contention, stating that under Rule 11 of the Central Excise Rules, 1944, read with Rule 173J, the proper officer (Assistant Collector) was empowered to refund the duty paid through inadvertence, error, or misconstruction. The Assistant Collector having jurisdiction over the factory of the petitioner was fully empowered to pass the order of refund.

5. Applicability of Supreme Court Judgments on the Determination of Assessable Value:

The petitioner relied on the principles laid down by the Supreme Court in the case of A.K. Roy v. Voltas Ltd., which were reaffirmed in subsequent decisions such as Atic Industries Limited and Bombay Tyre International Limited. The court held that the principles laid down by the Supreme Court were applicable to the facts of the case and that the assessable value should be determined based on the prices charged by the petitioner to its stockists/distributors.

Conclusion:

The court concluded that the impugned notice issued by the Board was without jurisdiction and based on untenable grounds. The Assistant Collector had correctly determined the assessable value and granted the refund in accordance with the principles laid down by the Supreme Court. The application succeeded, and the notice dated 14th April 1975, issued by the Board, was quashed.