1996 (10) TMI 75 - SC - Central Excise

Whether the cap forms part of the tube cleared and sold by the respondent, or not? Held that - This is a question of fact to be decided in a given case and no generalisation is possible. There has been no investigation of this factual aspect in this case because the respondent rushed to the High Court soon after receiving the demand notice. Moreover, the said decision was rendered prior to the decisions of this Court in Bombay Tyre International and Madras Rubber Factory Limited. We do not, however, express any opinion on the correctness or otherwise of the said decision of the Tribunal in Metal Box of India Ltd. 1983 (3) TMI 258 - CEGAT, NEW DELHI . The proper course in the circumstances is to leave the matter to be gone into and determined by the appropriate authority in charge of approving the price list. The authority shall decide the said question after ascertaining the relevant facts and in the light of the law declared by this Court. The appeal is accordingly allowed and the judgment of the learned Single Judge and the Division Bench of the Bombay High Court is set aside subject to the direction that insofar as the inclusion of the value of the plastic caps in the value of the extruded tubes is concerned, the matter shall be gone into and determined by the authorities under the Act in accordance with law.

Summary

Issues:
Valuation of excisable goods for excise duty purposes, inclusion of post-manufacturing expenses in assessable value, interpretation of Tariff Item 27, challenge to validity of Clause (f) in Tariff Item 27, levy of duty on goods between specific dates.

Analysis:

Valuation of Excisable Goods:
The case involved determining the assessable value of aluminium tubes manufactured by the respondent for excise duty purposes. The respondent argued that certain post-extrusion operations, such as coating, printing, and fitting caps, should not be included in the assessable value. However, the Supreme Court held that under Section 4 of the Central Excise Act, the wholesale cash price at the place of removal is the basis for valuation, and all expenses contributing to the value of the goods until sale must be included. The Court rejected the concept of post-manufacturing expenses and emphasized that the value of the goods sold by the manufacturer forms the basis for excise duty calculation.

Interpretation of Tariff Item 27:
The Court examined Tariff Item 27 of the Central Excise Act, which included extruded shapes and sections, including extruded pipes and tubes. The respondent contended that the plastic caps fitted to the tubes were not part of the manufactured product. However, the Court held that whether the caps formed part of the tubes was a factual question to be determined by the appropriate authority. The Court emphasized that the value of the plastic caps should be considered in the assessable value of the tubes unless proven otherwise.

Validity of Clause (f) in Tariff Item 27:
A challenge was raised regarding the validity of Clause (f) in Tariff Item 27, which pertained to containers, plain, lacquered, or printed. The Court referenced a previous decision upholding the validity of the clause and rejected the challenge. Additionally, a contention was made regarding the levy of duty on tubes between specific dates concerning the introduction of the Finance Bill. The Court clarified that the charges of printing and lacquering were includible in the assessable value irrespective of the introduction of Clause (f).

Judgment:
The Supreme Court allowed the appeal, setting aside the judgments of the High Court and directing the authorities to determine the inclusion of the value of plastic caps in the assessable value of the extruded tubes. The Court dismissed other related appeals and upheld the validity of Clause (f) in Tariff Item 27. The challenges to the levy of duty on goods between specific dates were also dismissed.

This detailed analysis covers the issues of valuation of excisable goods, interpretation of Tariff Item 27, challenges to the validity of specific clauses, and the levy of duty on goods within a specified period as addressed in the Supreme Court judgment.