1999 (10) TMI 76 - HC - Central Excise

Issues Involved:
1. Quashing of orders by the Assistant Collector, Central Excise.
2. Approval of price lists excluding the cost of packing.
3. Constitutionality of Section 4 of the Central Excises and Salt Act.
4. Restraint on demanding excise duty on the cost of packing for specific periods.
5. Refund of excise duty paid under protest on the cost of packing charges.

Issue-wise Detailed Analysis:

1. Quashing of Orders by the Assistant Collector, Central Excise:
The petitioner sought to quash the orders dated 29-6-1981 and 30-6-1981 by the Assistant Collector, Central Excise, Allahabad, which included the cost of packing in the assessable value of goods. The court examined whether the cost of secondary packing should be included in the assessable value of the goods. The petitioner argued that packing was only to avoid breakage during transit and not part of the manufacturing process. However, the respondents countered that packing was necessary for the goods to be accounted for in the production records and thus incidental to the completion of manufacture.

2. Approval of Price Lists Excluding the Cost of Packing:
The petitioner requested the court to direct the Assistant Collector to approve the price lists excluding the cost of packing. The court referred to the legal precedents set by the Supreme Court, particularly the cases of Union of India v. Bombay Tyre International Limited and Union of India v. Godfrey Philips India Ltd. The court concluded that the cost of secondary packing necessary for putting the goods in the condition in which they are generally sold in the wholesale market at the factory gate should be included in the assessable value unless the packing is durable and returnable.

3. Constitutionality of Section 4 of the Central Excises and Salt Act:
The petitioner initially challenged the constitutionality of Section 4 of the Central Excises and Salt Act, arguing it was ultra vires the legislative competence of the Parliament and Section 3 of the Act. However, this contention was not pressed during the hearing, and thus, the court did not delve into this issue.

4. Restraint on Demanding Excise Duty on the Cost of Packing for Specific Periods:
The petitioner sought a direction to restrain the respondents from demanding excise duty on the cost of packing for the periods from 19-6-1980 to 1-3-1981 and 2-3-1981 to 30-6-1981. The court noted that the petitioner had not paid excise duty on the cost of packing for these periods and had filed the petition based on these averments. The court emphasized that the inclusion of packing costs in the assessable value was consistent with the legal principles established by the Supreme Court.

5. Refund of Excise Duty Paid Under Protest on the Cost of Packing Charges:
The petitioner also sought a mandamus directing the Assistant Collector to refund the amount of excise duty paid under protest on the cost of packing charges after 1st July 1981 and to refrain from demanding any future excise duty on packing charges. The court observed that the petitioner had failed to provide substantial evidence that the secondary packing was unnecessary for selling the goods in wholesale at the factory gate or that it was durable and returnable. The court found no error in the orders passed by the Assistant Collector and dismissed the petition.

Conclusion:
The court dismissed the petition, finding no merit in the petitioner's claims. The orders of the Assistant Collector, which included the cost of secondary packing in the assessable value, were upheld. The court emphasized that the cost of secondary packing necessary for putting the goods in the condition in which they are generally sold in the wholesale market at the factory gate should be included in the assessable value unless the packing is durable and returnable. The interim order dated 1-9-1981 was discharged, and no order as to costs was made.

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