1994 (9) TMI 79 - HC - Central Excise

Issues Involved:
1. Legality and validity of Trade Notice No. 2/87 dated 1-4-1987.
2. Requirement to submit separate price lists for factory gate sales and depot sales.
3. Determination of assessable value under Section 4 of the Central Excises and Salt Act, 1944.
4. Maintainability of the writ application.
5. Validity of show cause notices issued under Section 11A of the Central Excises and Salt Act, 1944.

Detailed Analysis:

1. Legality and Validity of Trade Notice No. 2/87 dated 1-4-1987

The Trade Notice No. 2/87 required assessees to file separate price lists for factory gate sales and depot sales. The petitioner challenged the legality of this notice, arguing that it interfered with the quasi-judicial functions of the excise authorities and was beyond the administrative scope allowed under Rule 233 of the Central Excise Rules, 1944. The court held that the Trade Notice was issued without authority of law and was liable to be set aside. The court emphasized that administrative instructions cannot change the basis of assessment and that such instructions should not interfere with the quasi-judicial functions of the excise authorities.

2. Requirement to Submit Separate Price Lists for Factory Gate Sales and Depot Sales

The respondents argued that due to the different prices at factory gate sales and depot sales, the petitioner was required to submit separate price lists under Section 4(1)(a) proviso (i) of the Act. The court, however, held that when the value of excisable goods can be determined under Section 4(1)(a), there is no need to resort to Section 4(2). The court quashed the communications directing the petitioner to submit separate price lists for depot sales, stating that the assessment should be based on the factory gate prices alone.

3. Determination of Assessable Value under Section 4 of the Central Excises and Salt Act, 1944

The court examined the provisions of Section 4 before and after its amendment in 1973. It was argued that the new Section 4 did not materially change the method of valuation from the old Section 4. The court reiterated that the normal price at the factory gate should be the basis for determining the assessable value. The court cited several Supreme Court judgments, including A.K. Roy v. Voltas Limited and Union of India v. Bombay Tyre International, to support the view that the factory gate price should be used for assessment purposes when it is ascertainable.

4. Maintainability of the Writ Application

The respondents contended that the writ application was not maintainable due to the availability of alternative remedies. The court, however, held that the writ application was maintainable because the Trade Notice was issued without jurisdiction and constituted a nullity. The court cited various judgments to support the principle that when an order is ex facie without jurisdiction, the existence of alternative remedies does not bar the maintainability of a writ application.

5. Validity of Show Cause Notices Issued under Section 11A of the Central Excises and Salt Act, 1944

The petitioner challenged the show cause notices issued under Section 11A, arguing that the factory gate price should be the basis for assessment. The court quashed the show cause notices, holding that the respondents had no authority to re-determine the value of goods under Section 4(2) when the factory gate price was ascertainable. The court emphasized that the assessment should be based on the factory gate price, and the show cause notices were issued without proper jurisdiction.

Conclusion:

The High Court of Gauhati quashed the Trade Notice No. 2/87 and the related communications and show cause notices. The court held that the factory gate price should be the basis for determining the assessable value under Section 4(1)(a) of the Central Excises and Salt Act, 1944, and that the respondents had no authority to require separate price lists for depot sales or to re-determine the value under Section 4(2). The writ applications were allowed, and the parties were directed to bear their own costs.

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