1982 (8) TMI 63 - HC - Central Excise

Summary

Issues:
1. Whether the transactions between the respondent and principal purchasers are contracts for sale or works contracts.
2. Whether the value of nylon should be included in the price list for excise duty calculation.
3. Whether the respondent is entitled to the benefit of Notification No. 144/70.
4. Whether a writ of prohibition is the appropriate remedy in this case.

Analysis:

Issue 1:
The respondent contended that the transactions with principal purchasers are contracts for sale, while the appellants argued they are works contracts. The single Judge held that the price list reflected the consideration for sale, and the respondent's stance did not conclusively determine the nature of the transactions. The Division Bench emphasized the need for further examination based on submitted explanations and documents to determine if the contracts are works contracts or sales contracts.

Issue 2:
The appellants argued that the value of nylon should be included in the price list for excise duty calculation, irrespective of whether the respondent incurred expenses for it. The respondent maintained that as nylon was supplied free of cost by principal purchasers, its value need not be included in the calculation. The Division Bench highlighted the need for a comprehensive assessment after the respondent submits explanations and supporting documents.

Issue 3:
The respondent sought the benefit of Notification No. 144/70, which exempted certain excise duties based on contract prices. The appellants contended that the exemption was not applicable due to the nature of the transactions. The Division Bench emphasized the need for a detailed examination after the submission of necessary documents to determine eligibility for the exemption.

Issue 4:
The appropriateness of a writ of prohibition was questioned by the appellants, arguing that it should not be issued when the jurisdictional facts were still being ascertained. The Division Bench agreed, stating that the issuance of a writ of prohibition was premature at the fact-finding stage. The appeals were allowed, permitting further proceedings based on the show cause notices issued.

Conclusion:
The Division Bench allowed the appeals, emphasizing the need for a detailed examination of the issues raised, including the nature of transactions, excise duty calculations, eligibility for exemptions, and the appropriateness of remedies. The Court refused the oral prayer for a certificate of appeal to the Supreme Court, stating that no substantial question of law of general importance arose in the case.