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TMI Blog1976 (12) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... ng as they were before such change. The petitioner follows a uniform pattern and procedure for selling and marketing its products mentioned hereinbefore, in accordance with which the petitioner s products reach the ultimate consumers of its products through a series of sales and resales in the following manner. The petitioner, which is the manufacturer, sells to the primary wholesale buyers, or dealers otherwise known in the cigarette industry as distributors who in their turn, sell to secondary wholesalers known in common parlance in such industry as wholesalers. These secondary wholesalers, in their turn, sell to the retailers who pass on the products by selling to the consumers at large. The petitioner makes all sales of its products to its distributors otherwise known as wholesale buyers or dealers in large bulk entirely on a principal to principal basis. Such sales are evinced by written contracts which represent normal commercial arrangements and are concluded in the usual course of business. During the relevant periods the petitioner never sold its products to any one in the chain set out above other than the distributors. These writ petitions are in respect of products whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36,90,056.57 which has been demanded as additional excise duty apart from that which has been shown by the petitioner in its return duly filed. A prayer has also been made for the issuance of the writ of prohibition restraining the respondents from proceeding any further in respect of the show cause notices issued by the Central Excise authority (respondent No 4) dated the 26th of November, 1973 and 21st of December, 1973 copies of which have been marked Annexures 6 and 8 respectively. This amount of additional excise duty demanded from the petitioner is in respect of the sales made during the period between the 18th of July, 1973 and the 7th of February, 1974. On 26-6-1974 this writ application was admitted, rule issued and an order of injunction was passed restraining the respondents from realising the sum of ₹ 36,90,056.57 till the disposal of this application. 5. In C.W.J.C. 1203/74 a prayer has been made for the issuance of appropriate writs quashing Annexures 9, 10, 14 and 15 to the writ application. Annexures 9 and 10 both dated the 19th of July, 1974 are orders and provisional assessments made by the Superintendent of Central Excise, I.T.Co., Monghyr, respondent N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mands are in respect of the manufacture and sale by the petitioner effected during the month of June, 1974, as stated earlier. 6. In C.W.J.C. 1252/74 the petitioner claims that he had made a declaration of value under S. 4 as effective from the 3rd of July, 1974. Such a declaration was made as is contemplated by Law. The Superintendent of Central Excise, respondent No. 5, passed orders on such declaration by the petitioner on 3rd August, 1974 as contained in Annexure 4 and 11th July, 1974 as incorporated in Annexure 5, whereby he has ordered that the wholesale price declared in column 5 (c) of the price list which included post-manufacturing costs and expenses was approved and should be the basis of assessable value as per Section 4 (a) of the Act. A prayer has been made for issuance of appropriate writs quashing such orders of respondent No. 5 and directing the Excise authorities to make assessment in accordance with law and restraining them from including post-manufacturing costs and expenses for the purpose of assessing the excise duty. 7. The question arising for determination in these cases as stated earlier, is the scope and true purport of the provision of S. 4 (a) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a `cash price that is to say a price free from any augmentation for credit or other advantage allowed to a buyer; it is to be a net price, that is to say it is a price `less trade discount. The Lordships, therefore, held that the words the wholesale price were used in the section in contradistinction to a retail price , and that not only on the ground that such is a well recognised meaning of the words but because their association with the words trade discount indicates that sales to the trade are those in contemplation, and also because only by attaching that meaning to the word is the wholesale price relieved of the loading representing importation expenses which, as a matter of business, must always be charged to the consumer, and which are eliminated. 10. It has further been held that excise is a tax on production and manufacture of goods. Section 4 of the Act provides that the real value should be found after deducting the selling cost and selling profits and that the real value can include only the manufacturing cost and the manufacturing profit. The section makes it clear that excise is levied only on the amount representing the manufacturing cost plus the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s at arm s length and the price charged by the appellants for sales in wholesale made to I.C.I. and Atul less trade discount of 18% was, therefore, clearly wholesale cash price within the meaning of S. 4(a) and it did not make any difference that the wholesale dealings of the appellants were confined exclusively to I.C.I. and Atul and apart from these two, no independent buyers could purchase the dye-stuffs in wholesale from the appellants. 11. It has further been laid down in the case of Atic Industries that Sec. 4 makes it clear that excise is levied only on the amount representing the manufacturing cost plus the manufacturing profit and excludes post-manufacturing cost and profit arising from post-manufacturing operation, namely, selling profit. The value of the goods for the purpose of excise, therefore, must take into account only the manufacturing profit and it must not be loaded with post-manufacturing cost or profit arising from post-manufacturing operation. The price charged by the manufacturer for sale of the goods in wholesale would thus represent the real value of the goods for the purpose of assessment of excise duty. If the price charged by the wholesale dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred to above that excise is a tax on the production and manufacture of goods and hence must necessarily exclude from its sweep any post-manufacturing expenses or selling profits. 12. I may now refer to the decisions of the different High Courts to which our attention was invited by Mr. Ranadeb Choudhuri, Learned Counsel for the petitioner, the writ case of Indian Tobacco Co. Ltd. v. Union of India (Misc. Petn. No. 293 of 1974) decided by a Bench of the Bombay High Court on 15-12-1975, incidentally,the petitioner in that case was also the Indian Tobacco Company Limited. The other cases referred to at the Bar were those of Union of India v. I.T.C. (Writ Appeals Nos. 8 and 13 of 1975 decided on 20-2-1976) in which a Bench of the Karnataka High Court at Bangalore laid down, the law to the same effect, so are also a decision of the Andhra Pradesh High Court in Vazir Sultan Tobacco Co. Ltd. v. Union of India (Writ Petition Nos. 1748 and 7143 of 1974 and 2274, 2275 and 5136 of 1975) decided on 19-12-1975 and that of Madras High Court in Madras Rubber Factory Ltd. v. Supdt. of Central Excise 1977 E.L.T. (J 85). Its is needless to multiply the decisions of the various High Courts. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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