2009 (7) TMI 155 - SC - Central Excise

Whether Section 4 of the Central Excise Act, 1944 (as substituted with effect from 1-7-2000) and the definition of Transaction Value in Clause (d) of sub-Section (3) of Section 4 are subject to Section 3 of the Act? Whether Sections 3 and 4 of the Central Excise Act, despite being interlinked, operate in different fields and what is their real scope and ambit? Whether the concept of Transaction Value makes any material departure from the deemed normal price concept of the erstwhile Section 4(1)(a) of the Act? Held that - Direct the Registry to place this order before Hon ble the Chief Justice of India for appropriate directions.

Summary

Issues:
1. Interpretation of Section 4 of the Central Excise Act, 1944 post substitution with effect from 1-7-2000.
2. Determination of assessable value of excisable goods for the purpose of levy of duty of excise.

Analysis:

Issue 1: Interpretation of Section 4 of the Central Excise Act, 1944 post substitution with effect from 1-7-2000

The Tribunal held that despite the amendment introducing the concept of "transaction value" in Section 4(1)(a) of the Act, the decision in the case of Collector of Central Excise v. M/s. Indian Oxygen Ltd. still holds, stating that charges for containers provided to customers are not to be added to the price of goods for determining assessable value. The definition of "transaction value" in Section 4(3)(d) includes amounts payable by the buyer in connection with the sale but does not override the charging provision of Section 3. The Court in Commissioner of Central Excise v. Acer Ltd. emphasized that Section 4 is a machinery provision subject to the charging provision of Section 3. However, the Court expressed reservations about interpreting the definition of "transaction value" in a manner that dilutes its width.

Issue 2: Determination of assessable value of excisable goods for the purpose of levy of duty of excise

The Court highlighted that Section 3 of the Act provides for the levy of excise duty on excisable goods, while Section 4 deals with the valuation of excisable goods for the purpose of charging excise duty. The Court noted that both sections operate independently, and the measure for assessing the levy need not necessarily align with the nature of the levy itself. The Court raised concerns regarding the interpretation of Sections 3 and 4, stating that they operate in different fields, and the definition of "transaction value" should not be read in a way that restricts its scope. The Court decided that the issues raised in the appeals are of significant importance and require consideration by a larger Bench to clarify the interplay between Sections 3 and 4, the scope of the "transaction value," and any departure from the previous concept of deemed normal price under Section 4(1)(a) of the Act.

In conclusion, the Court directed the matter to be placed before the Chief Justice of India for appropriate directions, indicating the need for a larger Bench to address the complex legal issues surrounding the interpretation and application of Sections 3 and 4 of the Central Excise Act, 1944 post the substitution of Section 4 with effect from 1-7-2000.