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TMI Blog1984 (11) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... roduct in the manufacture of which indigenous cotton seed oil was used was exempt from so much of the duty of excise leviable thereon as was equivalent to the amount calculated at the rate specified in the Table annexed to the Notification. Column 3 of the Table set out different rates per tonne depending on the proportion of indigenous cotton seed oil used to the total weight of the vegetable product manufactured. Thus, where the cotton seed oil used was in excess of 30% but not in excess of 40% of the total weight of the vegetable product manufactured, the extent of exemption was at the rate of ₹ 200/- per tonne on the cotton seed oil which was in excess of 30% of the total weight of the vegetable product manufactured. On cotton seed oil in excess of 40% but not in excess of 50% of the total weight of the vegetable product, the rate of exemption was ₹ 250/- per tonne. On cotton seed oil in excess of 50% of the total weight of the vegetable product manufactured, the exemption was again at the rate of ₹ 200/- per tonne. As is implicit in the slab rates given above, no exemption was admissible where the cotton seed oil did not exceed 30% of the total weight of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on retrospective effect for the period from 1-10-1975 to 27-2-1982. 5. It is commonly accepted that the above amendment was in consequence of the view taken by the Delhi High Court in the case of Modi Rubber Ltd., Modinagar v. Union of India and others, reported in 1978 E.L.T. 127. Since the amendment was specifically made retrospective for the period from 1-10-1975 onwards, the position in law for the two periods would have to be considered separately. 6. For the period prior to 1-10-1975, Shri Ravinder Narain relied strongly on the above mentioned judgment of the Delhi High Court in Modi Rubber Ltd. He specifically referred to paragraphs 21 to 23 of that judgment, which are reproduced below :- "21. Mr. Dewan further pointed out that in order to determine the excise duty leviable on the items produced by the petitioner, it is necessary first to determine the assessable value under Section 4 of the Act. It is only after the assessable value is determined that the excise duty leviable thereon is ascertained. It is erroneous to suggest, as is done by the Government, that assessable value will have to be again determined after taking into consideration the relief and exem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that he was relying upon, so that the other side could have an opportunity of commenting on their applicability to these appeals. Thereupon Shri Ravinder Narain cited the judgment in the case of Indian Aluminium Co. Ltd. and another v. Union of India 'and others (1983 E.L.T. 349). 7. Shri Ravinder Narain submitted that the above mentioned judgments of the Delhi High Court were clearly applicable for the period prior to 1-10-1975 and in terms of those judgments the duty to be deducted would be the duty without talking into account the relief given in terms of the exemption notification. 8. As regards the period from 1-10-1975 onwards, to which the Explanation as inserted by the 1982 Finance Act is applicable, Shri Ravinder Narain's first argument was that the amendment itself was bad in law and therefore ineffective. He stated that this ground had been advanced in writ petitions filed and pending before the Delhi High Court. He however appreciated that the Tribunal could not go into the question of the validity or otherwise of an enactment and did not argue this aspect in detail. 9. Shri Ravinder Narain, however, advanced an argument which in some respects was sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment. 13. Shri Ravinder Narain further submitted that the duty on vanaspati at the relevant time was 5% ad valorem. The appellants were showing in their invoices the value and the excise duty separately, and not a composite price. Accordingly, the price or value was novt susceptible to adjustment in consequence of the exemption being allowed. 14. Finally, Shri Ravinder Narain submitted that in terms of the Notification the "rebate" had to be calculated on the basis of the cotton seed oil used over a period of time (as mentioned above, the Notification is on the basis generally of half years). Thus, at the time a particular consignment was cleared, the assessees could not know definitely the quantum of exemption which they would ultimately be entitled to get under the Notification. If the assessable value were to be made dependent on the quantum of exemption to be determined after a period of some months, it would follow that there was no definiteness about the assessable value at the time of clearance. It could not be the intention of Government in granting the exemption that the assessable value and consequently the quantum of duty should be incapable of an exact dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Jain, for the period from 1-10-1975 the Explanation added by section 47 of the Finance Act, 1982 made it very clear that the duty to be deducted was the effective duty. Since this was the position after 1-10-1975, it should also be the position prior to that date, in view of the observations of the Supreme Court referred to above. 18. Shri Jain submitted that in respect of the period after 1-10-1975 there had been a number of decisions by different benches of the Tribunal on the same lines as the three decisions referred to by Shri Ravinder Narain. In the result, he submitted that the orders of the lower authorities were correct both as regards the period prior to 1-10-1975 and as regards the period from 1-10-1975 and that the appeals should be rejected. 19. A question was put to Shri Jain whether an assessment once made on a particular basis could be reopened by the excise authorities. Shri Jain submitted that such reassessment was permissible. He referred to a judgment of the Delhi High Court in the case of Star Paper Mills Ltd. v. Union of India and others (1981 E.L.T. 577). In that case it had been held that Rule 10 of the Central Excise Rules provides for reopen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a number of other judgments of the Delhi High Court to the same effect, but he could not furnish the specific citations. He offered to send a list of these citations after the hearing was over. It was pointed out to him by the Bench that this would not be fair to the respondent. It would not be proper for the Bench to take into account judgments which had not been specifically cited, and on which the other side had no opportunity to make any submissions. Notwithstanding these observations of the Bench, the above-mentioned letter has been received, which refers to six reported and one unreported judgment, in addition to the judgments in the case of Modi Rubber Ltd. and Indian Aluminium Co. Ltd., which were specifically cited. We have again to observe that it would not be proper or fair for us to take into account judgments which were not cited during the hearing and on which the other side had no opportunity to comment. We further observe that these citations are sought to be given, not in reply to a point made by the other side, but as part of the case of the appellants themselves and could well have been kept ready for reliance during the hearing. In these circumstances we do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt the exemption in terms of Notification No. 230/72. Shri Ravinder Narain laid stress on the fact that the newly inserted Explanation did not define the term "leviable", but referred to "the effective duty of excise payable". 27. With all respect to the learned Counsel for the appellants, we are unable to find force in this argument. We find that the Explanation defines what shall be the "effective duty of excise". Where any exemption is admissible, it is the duty as laid down in the Act as reduced so as to give full and complete effect to such exemption. In other words, this is what is even in common parlance referred to as the "effective duty" or "effective rate of duty". Employing this definition of "effective duty", the Explanation states that the duty of excise payable on any excisable goods shall be the sum total of the effective duty under the Central Excises and Salt Act and the aggregate of the effective duties under other Central Acts, if any. The term "payable" is brought in only for the purpose of indicating that where there are duties under more than one Act, the amount of duty payable shall be the total of the effective duty under each such Act. The term "paya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d it difficult to accept this argument. The above-mentioned observation of the Supreme Court is certainly a very important one, as indicating that the object and purpose as well as the central principle at the heart of the scheme remained the same. It would not, however, be correct to extend this principle so as to equate the old and the new sections even where there is a clear difference in the wording. This is much more so when we consider the Explanation which was inserted through the Finance Act, 1982 and made retrospective from 1-10-1975. Shri Jain argued that this was because the new Section 4 came into effect only from 1-10-1975 and before that the old Section 4 was in force. It appears to us that if the Legislature had so desired, a corresponding retrospective amendment could have been made in the old Section 4. Since that has not been done, and the amendment made has been specifically made retrospective only from 1-10-1975, it cannot be read into the old Section 4 which was in force prior to 1-10-1975. Therefore, for considering the position prior to 1-10-1975 we have to take into account the wording of old Section 4, that is Section 4 prior to its suppression, without rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n paragraph 15 above, we have reproduced the relevant paragraph from that judgment. In that judgment the High Court upheld the decision of the Central Government acting as the revisional authority, wherein it was held as follows :- "The Government observe that the duty actually payable is alone eligible for abatement under section 4 ibid and the petitioners' contention, that the abatement should be allowed without taking into consideration the abatement from duty in respect of cotton seed oil, is not correct." dated the 10th above mentioned case had reference to Notification No. 6/62-C.E., dated the 10th February, 1962 as amended from time to time. Although the notification itself is not reproduced in the judgment, it is clear that it was a predecessor to Notifications No. 230/72-CE, dated 15-12-1972 and 23/75-C.E., dated 1-3-1975, which are under our consideration. It is also seen from the judgment that the provisions of Notification No. 6/62 were materially similar to those of Notifications No. 230/72 and 23/75, as seen from the following sentence in paragraph 3 of the judgment :- "The petitioners' case is that on the use of cotton seed oil in the manufacture of vegetable prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been set out, namely, that such an interpretation would lead to discrimination between a manufacturer of goods liable to ad valorem duty and a manufacturer of goods liable to specific duty (or ad valorem duty combined with a tariff value). This is followed by the observation, "We are in agreement with this contention of the petitioner". (Emphasis ours). 34. From the above, it can be seen that the Delhi High Court accepted the argument that the adoption of the Government view would lead to discrimination between different assessees (as already observed Notification No. 198/76 covered a large number of commodities, of which some were liable to ad valorem duty and some to specific duty). No specific observation has been made on the earlier argument that adoption of the Government view would not be practicable, as it would lead to a situation where the duty keeps on changing. We shall separately refer to this argument (which was also advanced by Shri Ravinder Narain before us). What is important to note is that the argument which was specifically accepted by the Delhi High Court was the one based on discrimination. We find that where the affect of Notification No. 230/72 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and "duty". 37. We now come to the last argument of Shri Ravinder Narain that in terms of the Notification the "rebate" had to be calculated on the basis of the cotton seed oil used over a period of time, such as a half year, and that consequently the appellants could not know at the time of clearance of a consignment the exact quantum of duty payable, and that (if the view of the Central Excise authorities were to be accepted) they would not also know the assessable value at the time of clearance. According to him, this was a situation which could not have been intended and therefore the interpretation of the Central Excise authorities was not sustainable. 38. We are unable to accept the above argument. It is not as if the Central Excise Act and Rules contemplate that the assessable value of any goods must be definitely and finally determined at the time of clearance. In fact, there are specific provisions to the contrary, to cover a case where the value of any goods cannot be definitely ascertained at the time of clearance. Rule 9B of the Central Excise Rules, relating to provisional assessment to duty, deals with precisely such a situation. It fact, sub-rule (3) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easons given above, it was felt by the two Members, who have signed the Majority judgment, that the view taken by the lower authorities in this case, namely, that the expression "duty of excise leviable thereon" refers to the duty of excise after giving full effect to the exemption notification, deserved to be upheld as regards the period prior to 1-10-1975 as well as the period on or after 1-10-1975. We were accordingly of the view that the two impugned orders of the Appellate Collector of Central Excise and Customs, New Delhi, should be confirmed and the two appeals rejected. An order to this effect was dictated by one of us, for concurrence of the other Members. However, after going through the proposed order, our learned brother Shri M. Gouri Shankar Murthy has indicated his intention of recording a dissenting order. He was also good enough to show us a copy of the proposed dissent. We are availing ourselves of the opportunity of adding some further observations with reference to the proposed dissent. 41. In the proposed order, Shri Murthy had listed five orders of the Tribunal which held that the assessable value can be recomputed with the addition of the refund in duty. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of excise duty does not change the nature of the duty. Of the many authorities in support of the above proposition, we shall cite only one, namely, the observations of the Supreme Court in the case of R.C. Jall Parsi and others v. Union of India and others (AIR 1962 SC 1281). We reproduce below these observations :- "With great respect, we accept the principles laid down by the said three decisions in the matter of levy of an excise duty and the machinery for collection thereof. Excise duty is primarily a duty on the production or manufacture of goods produced or manufactured within the country. It is an indirect duty which the manufacturer or producer passes on to the ultimate consumer, that is, its ultimate incidence will always be on the consumer. Therefore, subject always to the legislative competence of the taxing authority, the said tax can be levied at a convenient stage so long as the character of the impost, that is, it is a duty on the manufacture or production, is not lost. The method of collection does not affect the essence of the duty, but only relates to the machinery of collection for administrative convenience". (Emphasis added). 44. We, therefore, conti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rring in clause (a) of S. 4] or "the price" [in clause (b) thereof]? (ii) "Price" is not defined in the Act itself. It is, however, the money consideration for a sale of goods in terms of Section 2(10) of the Sale of Goods Act, 1930. The determination of the price payable is always in terms of the agreement of sale between the buyer and the seller (i.e., the manufacturer or the assessee in the context of Section 4 of the Act). Such agreement may be either express or implied in the facts and circumstances of each case. (iii) Whether "the price" or money consideration for sale of goods includes reimbursement of duties and taxes leviable on the manufacturer/assessee/seller depends on the terms and conditions of the agreement to sell - implied or express. In the case of a tax on sale of goods, the incidence of the tax is on the seller and not on the buyer. The payment by the buyer of the tax upon a sale of goods in addition to "the price" is in the nature of reimbursement of the quantum of such tax by virtue of the terms and conditions, either express or implied, of the agreement to sell. [AIR 1958 SC 452 - Tata Iron and Steel Co. Limited v. State of Bihar - Para 17 - "The buyer is u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price, necessarily, includes freight and accordingly freight also becomes liable to sales tax. [(1979) 1 SCR 276 = AIR 1978 SC 1496; AIR 1980 S.C. 346; AIR 1980 S.C. 952]. The Explanation makes a clear distinction between "price" which may include reimbursement of excise duty and excise duty itself. [Trade discount also adverted to in the Explanation is not referred to as not material in the facts of the case]. (e) (i) Once this were so -- it becomes altogether incomprehensible how the assessable value at the time of removal-namely the actual price for the -- goods or the consideration, without the element of duty-can be varied to the extent of diminution in the quantum of duty that may ultimately be found payable in consequence of a rebate to which the manufacturer may become entitled -- not at the time of removal-but on the expiry of the quarter of the financial year. A rebate in excise duty at the end of the quarter may reduce the quantum of excise duty already reimbursed as duty by the buyer and, as part of the consideration for the agreement of sale, but does not touch the price for the goods without duty or the assessable value determined in terms of the Explanation to Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is higher than the cost of manufacture plus a reasonable margin of profit for a manufacturer, he is required to deposit the amount of the difference into an Equalisation Fund. Reimbursement is made from such Fund to the manufacturer whose cost of manufacture and reasonable profit works out to more than the controlled price so that the one does not make an unintended profit and the other suffer loss in the fixation of the controlled price. When such reimbursement from the Equalisation Fund is made, it is an addition to the controlled price. So it stands on a better footing than a case where duty reimbursed to a manufacturer is refunded by the Revenue. Was any such reimbursement from the Equalisation Fund ever considered to necessitate a recomputation of the assessable value ? If not, a refund of excise duty by the Revenue of a part of the duty paid by the buyer to the assessee/manufacturer cannot, with greater reason, be the basis for a reassessment of the assessable value. (g) (i) Again if an assessment, as it could be reasonably presumed, has already been carried out of the Appellant's goods, it can be reopened and a reassessment made only if certain conditions specified in the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of short levy nor does such short levy result from any of the reasons set forth in Rule 10. Similarly, in the other case cited (International Computers Indian Manufacturers Ltd. v. Union of India - 1981 E.L.T. 632), their Lordships had occasion to observe even more categorically that if the conditions for re-assessment laid down in Section 28 of the Customs Act, 1962 are not satisfied, there could be no reopening of an earlier assessment or a re-assessment. (iv) The decisions cited for the Revenue, in the premises, do not support the case for the Revenue and justify the reopening of a completed assessment in the facts of this case. On the contrary, they are authorities for holding against the right of reopening such assessments when the conditions specified are not fulfilled. (v) It is not, however, on record if the assessments during this relevant period had been already completed by the time the right and entitlement to the rebate accrued. This could have been easily enquired into by a remand or otherwise and it could have been ascertained if it was sought to reopen completed assessments. (h) In the Tribunal, however, there have been at least five decisions that have been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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