2001 (8) TMI 119 - SC - Central Excise

Whether the administrative charges collected by the State Government under Section 8(4) of the Act is to be included in the assessable value of molasses cleared by the respondents? Held that - Under Section 4(4)(d)(ii) of the Central Excise Act what is to be excluded from the assessable value is the amount of duty of excise, sales tax and other taxes . Taxes, as such, are not defined in the Central Excise Act. If the expression tax is to be understood in the absence of any definition, it would certainly cover any levy. In such an event, administrative charges would be covered under Section 4(4)(d)(ii) as other taxes because it is a compulsory exaction made under an enactment and, therefore, a duty or impost and such impost must be held to be in the nature of a 'tax' covered by the aforesaid provisions. Against assessee.

Summary

Issues:
Interpretation of Section 4(4)(d)(ii) of the Central Excise Act regarding exclusion of administrative charges from assessable value.

Analysis:
The case involved an appeal by the Revenue challenging the exclusion of administrative charges collected under the Uttar Pradesh Sheera Niyantran Adhiniyam, 1964 from the assessable value of molasses. The Assistant Commissioner of Central Excise initially held that these charges should be included in the assessable value, but the Commissioner (Appeals) disagreed, considering them as a type of 'tax' under Article 366 of the Constitution. The Tribunal also upheld this view, stating that administrative charges could be considered as "other taxes" under Section 4(4)(d)(ii) of the Central Excise Act. The Tribunal emphasized that the term "tax" should be understood broadly to include all compulsory exactions made under statutory powers, including charges levied by local authorities. The Tribunal found no reason to interfere with the Commissioner's decision, leading to the appeals before the Supreme Court.

In the arguments presented, the Attorney General emphasized that Section 4 of the Central Excise Act deems the normal price of goods to include administrative charges, thus necessitating their inclusion in the assessable value. However, the respondents' advocates contended that administrative charges should be treated as a form of "tax" and excluded from the assessable value per Section 4(4)(d)(ii). The Supreme Court referred to previous judgments, such as Cape Brandy Syndicate v. IRC, to highlight the importance of interpreting tax laws based on the language used without any presumption or implication.

The Supreme Court analyzed the provisions of Section 4(4)(d)(ii) of the Central Excise Act, which exclude duties of excise, sales tax, and "other taxes" from the assessable value. Since the term "tax" was not specifically defined in the Act, the Court referred to previous cases like D.G. Ghose & Co. (Agents) Pvt. Ltd. v. State of Kerala & Anr. to support a broad interpretation of the term. Consequently, the Court concluded that administrative charges, being a compulsory exaction made under statutory powers, could be considered as "other taxes" under Section 4(4)(d)(ii). Therefore, the Court upheld the Tribunal's decision, affirming that administrative charges were in the nature of a 'tax' and should be excluded from the assessable value, dismissing the appeals and awarding costs to the respondents.