1997 (5) TMI 109 - SC - Central Excise

Interpretation of Section 9 of the Industries (Development and Regulation) Act 1951 the notification dated 28th December 1983 issued thereunder and Rules 2 and 3 of the Automobile Cess Rules 1984. Held that - The definition of the expression value for the specific purpose of Section 9(1) does not therefore apply to the valuation of goods to be made for the purposes of computation of the cess under the said notification. In other words in calculating 1/8 per cent ad valorem the value of the goods is not to be determined as set out in the Explanation to Section 9(1). For this purpose what is relevant is Rule 3 of the Automobile Cess Rules 1984 which states that the provisions of the Central Excises and Salt Act shall apply so far as may be in relation to the levy and collection of the cess. The calculation of 1/8 per cent ad valorem of the motor vehicle for the purposes of the levy and collection of the cess must therefore be made as if it was excise duty that was being calculated and applying the provisions of the Central Excises and Salt Act for the purpose. Appeal dismissed.

Summary

Issues:
Interpretation of Section 9 of the Industries (Development and Regulation) Act, 1951, notification dated 28th December, 1983, and Rules 2 and 3 of the Automobile Cess Rules, 1984.

Analysis:

The Supreme Court heard an appeal concerning the interpretation of Section 9 of the Industries (Development and Regulation) Act, 1951, the notification dated 28th December, 1983, and Rules 2 and 3 of the Automobile Cess Rules, 1984. The Revenue challenged the judgment of the Customs, Excise and Gold (Control) Appellate Tribunal regarding the levy of a cess on goods manufactured in the transportation industry. The main contention was the calculation of the cess on motor vehicles at the rate specified in the notification dated 28th December, 1983, which was set at 1/8 per cent ad valorem.

The Revenue argued that the cess should be levied based on the wholesale cash price of the motor vehicle without any deductions except trade discount and the amount of duty payable, as explained in Section 9(1) of the Act. On the other hand, the assessee contended that the valuation of the motor vehicle for cess calculation should follow the provisions of the Central Excises and Salt Act, 1944, as per Rule 3 of the Automobile Cess Rules.

The Tribunal accepted the assessee's argument, and the Supreme Court concurred. The Court emphasized that Section 9(1) of the Act empowers the Central Government to fix the rate of the cess, with the proviso limiting the rate to not exceed two annas per cent of the value of the goods. The Explanation in Section 9(1) defines the term "value" specifically for this provision. However, for calculating the cess under the notification, the Court held that the value determination should align with Rule 3 of the Automobile Cess Rules, applying the provisions of the Central Excises and Salt Act.

Therefore, the Court dismissed the appeals, upholding the application of Rule 3 of the Automobile Cess Rules for computing the cess on motor vehicles, in line with the Central Excises and Salt Act, 1944.