1989 (4) TMI 94 - HC - Central Excise

Summary

Issues Involved:
1. Determination of the manufacturer liable for excise duty.
2. Basis for determining assessable value for excise duty.
3. Claim for refund of excess excise duty paid.

Issue-wise Detailed Analysis:

1. Determination of the Manufacturer Liable for Excise Duty:

The main grievance of the writ petitioner is that the goods manufactured by Serampore Belting Works Limited (petitioner) at its own factory under an agreement with Messrs. Goodyear India Limited (respondent) cannot be considered as manufactured by Messrs. Goodyear, and thus, excise duty cannot be levied on the selling price of Messrs. Goodyear to their dealers and customers. The petitioner argued that it manufactures the goods with its own men and machinery and sells them to Goodyear, thus excise duty should be levied on the selling price by Serampore Belting Works Limited to Messrs. Goodyear.

The Court scrutinized the pleadings and materials on record and found that the goods are indeed manufactured by Serampore Belting Works Limited with its own men and materials. The goods are manufactured under the specification provided by Messrs. Goodyear and are inspected by Goodyear's representatives. However, there is no evidence that the goods are manufactured with the funds or materials provided by Goodyear. Therefore, the Court concluded that the goods manufactured by Serampore Belting Works Limited cannot be deemed as manufactured by Messrs. Goodyear India Limited.

2. Basis for Determining Assessable Value for Excise Duty:

The Court examined whether the excise duty should be levied on the sale price paid by Messrs. Goodyear India Limited to Serampore Belting Works Limited or on the sale price of the goods to Goodyear's dealers and customers. The Court referred to the case of Union of India & Ors. v. Cibatul Limited, which stated that excise duties are levied on goods manufactured in India and the value of the article is deemed to be the wholesale cash price at the time of removal from the factory.

The Court found that the wholesale price at which the goods with the trade marks affixed to them are sold by Serampore Belting Works Limited to Messrs. Goodyear India Limited should determine the value for the purpose of excise duty. This is supported by the decision in Joint Secretary to the Government of India & Ors. v. Messrs. Food Specialities Limited, which held that the wholesale price of goods, even when manufactured under another company's specifications and brand name, should be the value for excise duty purposes.

3. Claim for Refund of Excess Excise Duty Paid:

The petitioner claimed a refund for the excess excise duty collected based on the mistaken belief that duty was payable on Goodyear's selling price to their dealers/customers. The Court referred to the decision in Salona Tea Company Limited v. Superintendent of Taxes, which emphasized that taxes collected without the authority of law should be refunded. The Court noted that while the period of three years is normally taken as a limitation period, it is not inflexible, and the Court might consider delays reasonable based on circumstances.

The Court allowed the petitioner to make an independent application for a refund, which should be considered by the concerned authority without being influenced by the Court's observations, and disposed of within eight weeks from the date of filing the application.

Conclusion:
The writ petition is allowed in part. The Court issued a writ of certiorari quashing the order dated 9th September 1980 by the Assistant Collector of Central Excise, Calcutta-IV Division, and declared that the petitioner is the manufacturer liable for duty on its manufacturing profit and cost. The petitioner is granted leave to apply for a refund of excess duty collected, to be considered by the concerned authority in accordance with the law. There will be no order as to costs.