2003 (4) TMI 109 - SC - Central Excise

Whether in cases where a manufacturer includes equalised freight in the price of the goods and sells the goods all over the country at a uniform price, the Department is entitled to compute value by including the cost of transportation from the factory to the depot? Held that - Section 4 has to be read as a whole. If the place of removal was the factory, then the price would be normal price at the factory. If place of removal was some other place like a depot or the premises of a consignment agent and the price was different then that different price would be the price. It is because newly added Section 4(ia) was now providing for different prices at different places of removal that the definition of the term place of Removal had to be enlarged. Thus the amendment was not negativing the judgments of this Court. If that had been the intention it would have been specifically provided that even where price was the same/uniform all over the country, the cost of transportation was to be added. Thus, in cases where the price remains uniform or constant all over the country, it does not follow that value for purpose of excise changes merely because the definition of the term place of removal is extended. The normal price remains the price at the time of delivery and at the place of removal. In cases of equalised freight it remains the same as per the judgments of this Court set out in Union of India Ors. Etc. Etc. v. Bombay Tyre International Limited Etc. 1983 (10) TMI 51 - SUPREME COURT OF INDIA, NEW DELHI . It is because newly added Section 4(ia) was now providing for different prices at different places of removal that the definition of the term place of Removal had to be enlarged. Thus the amendment was not negativing the judgments of this Court. If that had been the intention it would have been specifically provided that even where price was the same/uniform all over the country, the cost of transportation was to be added.

Summary

Issues:
1. Interpretation of Section 4 of the Central Excise Act, 1944 regarding the valuation of excisable goods.
2. Whether the Department can include the cost of transportation from the factory to the depot in the value of goods sold at a uniform price nationwide.

Analysis:
1. The primary issue in this case revolves around the interpretation of Section 4 of the Central Excise Act, 1944, specifically concerning the valuation of excisable goods for the purpose of charging excise duty. The Court examined the amendments made to Section 4, particularly focusing on the definition of "place of removal" and its impact on determining the normal price of goods. The Court emphasized that the normal price is the price at the time of delivery and at the place of removal, as outlined in Section 4(1)(a) of the Act. The amendments introduced in Section 4(ia) allowed for different prices at different places of removal, necessitating an expanded definition of the term "place of removal" to accommodate this change. The Court concluded that the amendments did not alter the fundamental principle that the normal price is determined based on the actual sale price at the place of removal, maintaining consistency with previous judgments of the Court.

2. The second issue addressed in the judgment pertains to whether the Department can include the cost of transportation from the factory to the depot in the valuation of goods sold at a uniform price nationwide. The Tribunal had upheld the Department's view, citing the extended definition of "place of removal" to include the depot. However, the Court disagreed with this interpretation, highlighting that the normal price for excisable goods sold at a uniform price across the country remains unchanged, even with the expanded definition of "place of removal." The Court reiterated that the value for excise duty purposes is based on the actual sale price at the time and place of removal, emphasizing that the cost of transportation from the factory to the depot should not be included in such valuation. Consequently, the Court set aside the Tribunal's judgments and allowed the appeals with no order as to costs.

In conclusion, the Supreme Court's judgment clarifies the application of Section 4 of the Central Excise Act, 1944 in determining the value of excisable goods and reinforces the principle that the normal price is based on the actual sale price at the time and place of removal, unaffected by uniform pricing practices across different locations.