1987 (1) TMI 96 - HC - Central Excise

Summary

Issues:
1. Inclusion of the value of service contract in the assessable value for excise duty purposes under Section 4(4)(d) of the Central Excises and Salt Act.

Analysis:
The judgment concerns a Miscellaneous application questioning the inclusion of the value of a service contract in the assessable value for excise duty purposes under Section 4(4)(d) of the Central Excises and Salt Act. The petitioners argued that the service contract was optional, while the respondents denied its exclusion from the assessable value (para. 1).

Initially, the Excise Authorities did not include the service contract value in the assessable value. However, in 1983, instructions were issued to include it, leading to show cause notices and an order demanding excise duty on the service contract value (para. 2-3). A similar issue arose in the case of another manufacturer, where the Collector held that service contract charges should not be included in the assessable value (para. 4).

The affidavit submitted revealed different approaches by manufacturers regarding the deposit of excise duty on service contracts. The Additional Solicitor General acknowledged that administrative instructions are not binding on quasi-judicial Tribunals, emphasizing the need to decide the appeal based on the statutory provisions (para. 7-8).

Reference was made to a Supreme Court case involving automotive tyres to highlight the need for a judicial determination in the present case. Despite show cause notices and pending decisions, the impugned order demanded a substantial amount in excise duty, prompting the Court to intervene (para. 10-11).

The Court noted the differing approaches of manufacturers in paying excise duty on service contracts and directed the Collector to hear and dispose of the appeal without insisting on immediate deposit, considering the unique circumstances of the case (para. 13, 17). The Court clarified that the case did not involve unjust enrichment and made an interim order to safeguard the interests of both parties until the appeal's resolution (para. 16, 18).

Ultimately, the Court disposed of the writ petition based on the interim order, with the agreement of both parties' counsel. The issue of challenging the Administrative Instructions was also addressed, indicating that it no longer remained a subject of contention (para. 19-20).