1990 (10) TMI 79 - HC - Central Excise

Summary

Issues Involved:
1. Validity of excise duty on Depot Service Charges and Drum Filling Expenses.
2. Applicability of Section 4(1)(a) and Section 4(1)(b) of the Central Excises and Salt Act, 1944.
3. Alternative remedy under the Act.
4. Interpretation of "place of removal" and "normal price" under Section 4 of the Act.
5. Binding nature of previous decisions by the Collector (Appeals) and the Tribunal.

Issue-wise Detailed Analysis:

1. Validity of Excise Duty on Depot Service Charges and Drum Filling Expenses:
The petitioner, a company manufacturing various chemicals, was asked to pay excise duty on Depot Service Charges for sales through its depots. The Assistant Collector's order was initially set aside by the Collector (Appeals), but the Revenue continued issuing fresh demands. The High Court noted that the Collector (Appeals) had repeatedly decided in favor of the petitioner, and the matter was still sub-judice before the Tribunal. The court held that the Department should have waited for the Tribunal's decision before proceeding with further demands.

2. Applicability of Section 4(1)(a) and Section 4(1)(b) of the Central Excises and Salt Act, 1944:
The petitioner argued that Section 4(1)(a) was applicable since the normal price of the goods was ascertainable at the factory gate. The court referred to the Supreme Court's decisions in Union of India v. Bombay Tyre International Ltd. and Indian Oxygen Ltd. v. Collector of C.E., which clarified that the excise duty should be based on the factory gate price, excluding transportation and other post-manufacturing expenses. The court concluded that the Depot Service Charges and unloading charges should not be included in the assessable value.

3. Alternative Remedy under the Act:
The Revenue argued that the petitioner had an alternative remedy under the Act, citing various judgments, including Titaghur Paper Mills Co. Ltd. v. State of Orissa. The court observed that while alternative remedies are generally preferred, they do not oust the jurisdiction of the court, especially when statutory remedies are ill-suited to meet extraordinary situations. Given the repeated issuance of notices and the pending appeal before the Tribunal, the court found that the petitioner did not have an adequate and efficacious alternative remedy.

4. Interpretation of "Place of Removal" and "Normal Price" under Section 4 of the Act:
The court examined the definitions under Section 4 and concluded that the "place of removal" is the factory gate when the factory price is ascertainable. Referring to the Supreme Court's interpretation in Bombay Tyres and Indian Oxygen Ltd., the court held that the normal price should be the factory gate price, excluding transportation and other post-manufacturing expenses. The Depot Service Charges and unloading charges were deemed irrelevant for assessing excise duty.

5. Binding Nature of Previous Decisions by the Collector (Appeals) and the Tribunal:
The court emphasized that both the petitioner and the Department were bound by the decisions of the Collector (Appeals) unless reversed by a competent authority. The Department's continued issuance of notices despite these decisions was deemed inappropriate. The court held that the Department should have awaited the Tribunal's decision before proceeding with further assessments.

Conclusion:
The High Court allowed the writ petitions, quashing the order dated 10-2-1989 and restraining the Assistant Collector from adjudicating upon the notices. The court reiterated that the excise duty should be based on the factory gate price, excluding Depot Service Charges and unloading charges, aligning with the Supreme Court's authoritative pronouncements.