1987 (4) TMI 78 - HC - Central Excise

Summary

Issues Involved:
1. Determination of assessable value for Central Excise duty on "Miners' Boots".
2. Applicability of trade discount in the assessable value.
3. Consistency in the method of assessment by the Excise Department.
4. Examination of historical orders and their impact on current assessment.

Issue-wise Detailed Analysis:

1. Determination of Assessable Value for Central Excise Duty on "Miners' Boots":

The primary dispute revolves around the classification and valuation of "Miners' Boots," also known as "Industrial Safety Boots," for the purpose of levying Central Excise duty under the Central Excises and Salt Act. The petitioner contends that these boots should be valued similarly to other footwear, with a uniform trade discount applied, as historically practiced.

2. Applicability of Trade Discount in the Assessable Value:

The petitioner asserts that a 6% trade discount, as per the Central Board of Revenue's order dated 16th October 1957, should be applied uniformly to determine the assessable value. This order allowed a 6% discount to be deducted from the wholesale cash price, regardless of whether an actual trade discount was given. The petitioner argues that this method was intended to simplify calculations and should apply even when no discount is extended to the consumers.

The Assistant Collector of Central Excise, however, disallowed the discount for "Miners' Boots," stating that the boots were sold at a contract price of Rs. 34/- per pair without any discount, making this the assessable value under Section 4 of the Act. The Appellate Collector upheld this decision, noting that "Miners' Boots" had no wholesale market and were sold directly to consumers at a contractual price.

3. Consistency in the Method of Assessment by the Excise Department:

The petitioner highlights that the Excise Department has historically allowed a 6% trade discount on all footwear, regardless of the actual discount provided. This practice was evidenced by orders and assessments in previous years. The petitioner argues that the department's attempt to assess "Miners' Boots" differently, by not allowing the trade discount, is inconsistent with its established method of applying a uniform discount across all products.

The court noted that the department's method of taking the total turnover and allowing a 6% discount, irrespective of the actual discount, was a consistent practice. It was emphasized that the department could assess each lot of goods separately but had chosen not to do so. Therefore, it should not selectively apply different methods to "Miners' Boots."

4. Examination of Historical Orders and Their Impact on Current Assessment:

The court examined historical orders, including the Central Board of Revenue's orders dated 16th October 1957 and 2nd May 1956. These orders allowed a 6% trade discount for footwear sold both wholesale and through retail outlets, including those marked "Bata." The court found that these orders intended to apply the 6% discount uniformly, even for footwear sold directly to consumers.

The court directed the Appellate Collector to re-examine the scope and effect of these historical orders, particularly the order dated 2nd May 1956, which clarified that the discount should apply to footwear sold through retail depots directly to consumers. The court quashed the impugned orders and directed the Appellate Collector to pass a fresh order, considering the historical context and providing a notice of hearing to the petitioner.

Conclusion:

The writ petition was disposed of with directions for the Appellate Collector to re-evaluate the case, taking into account the historical orders and ensuring consistency in the method of assessment. The court emphasized that all questions of fact and law remain open for consideration during the re-assessment.