2002 (2) TMI 101 - SC - Central Excise

Valuation in Central Excise - Cum-duty price when charged, then in arriving at the excisable value of the goods the element of duty which is payable has to be excluded - Wholesale price which is charged is deemed to be the value for the purpose of levy of excise duty under Section 4 of Central Excise Act, 1944, but the element of excise duty, sales tax or other taxes which is included in the wholesale price is to be excluded in arriving at the assessable value

Summary

Issues:
1. Liability to pay excise duty on waste and scrap sold by respondent.
2. Interpretation of Section 4 of the Central Excises and Salt Act, 1944 regarding valuation of excisable goods.
3. Whether the price of waste and scrap sold should be considered as cum-duty price.

Issue 1:
The respondent, a manufacturer of motor vehicles, availed Modvat credit on duty paid on inputs under Rule 57A of the Central Excise Rules but had not paid excise duty on the raw material. The Collector raised a demand for excise duty on the waste and scrap sold by the respondent. The Tribunal concluded that excise duty was payable on the scrap sold. The respondent argued that the purchaser was not liable to pay any additional amount, hence the transaction should be considered as cum-duty price.

Issue 2:
Section 4 of the Central Excises and Salt Act, 1944 governs the valuation of excisable goods for excise duty purposes. The Act states that excise duty is chargeable based on the price at which goods are sold in wholesale trade, excluding the amount of excise duty, sales tax, and other taxes included in the price. The Tribunal correctly applied this provision by excluding the element of excise duty from the value of goods sold, as confirmed in previous judgments like Asstt. Collector of Central Excise v. Bata India Ltd.

Issue 3:
The Court referred to Hindustan Sugar Mills v. State of Rajasthan to explain that when a seller includes excise duty in the sale price, it forms part of the consideration payable by the purchaser. In the present case, the respondent, by implication, took on the obligation to pay all taxes on the goods sold and did not seek additional payment from the purchaser. Therefore, the Tribunal rightly held that the respondent is entitled to the benefit of Section 4(4)(d)(ii) of the Act. The appeal was dismissed, affirming the Tribunal's decision.