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TMI Blog1980 (3) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... cisable goods other than salt which are produced or manufactured in India and a duty on salt manufactured in, or imported by land into, any part of India as, and at the rate, set forth in the First Schedule". Section 3(2) of the Act empowers the Central Government to fix tariff values of excisable articles chargeable with duty ad valorem. Section 3(3) authorises fixation of different tariff values for different classes or descriptions of the same excisable articles. Section 3(2) and 3 (3) as they stood at the relevant time, read as follows : "3. (2) The Central Government may, by notification in the Official Gazette, fix, for the purpose of levying the said duties, tariff values of anv articles enumerated, either specifically or under general headings, in the First Schedule as chargeable with duty ad valorem and may alter any tariff values for the time being in force. (3) Different tariff values may be fixed for different classes or descriptions of the same article." Section 4 of the Act which deals with determination of value for the purposes of duty as in force at the material time, was as follows : "4. Determination of value for the purposes of duty - Where under this Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of taxation and would make the provision invalid. There is a presumption against unconstitutional exercise of legislative power and it is reasonable to infer that Legislature intended that in fixing tariff values under section 3 (2), the Government would bear in mind the nature of excise duty and follow the guidelines of valuation enacted in section 4. The Supreme Court in dealing with section 4 in A.K Roy v. Voltas Ltd. - 1977 E.L.T. (J 177) = AIR 1973 S.C. 225 observed : "Excise is a tax on the production and manufacture of goods. Section 4 of the Act, therefore, 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 manufacturing profit and excludes post-manufacturing cost and the profit arising from post-manufacturing operation, namely selling profit. The section postulates that the wholesale price should be taken on the basis of cash payment thus eliminating the interest involved in wholesale price which gives credit to the wholesa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that there was a wide variation in the price charged by different manufacturer. The report then notices that the prices charged by M/s. Mettur Chemicals Industries Corporation, which is a Government Company, differed from customer to customer and ranged between Rs. 312/and Rs. 600/- per metric tonne, but from most of the parties the price charged was Rs. 500/- per metric tonne. The report further notes that M/s. Alkali Manufacturing Association of India of which the petitioner Company and other manufacturers of chemicals are members, submitted that as prices widely differed from factory to factory and from customer to customer, the value for purposes of levy of duty should be assessed under section 4 and should not be fixed under section 3(2). The report also notes that the arguments put forward by the Association were supported by the data. The report then states that there were a number of units which were using liquid chlorine for captive consumption and that the data for such units had not been taken into account and assessment in cases of units of this type would pose a problem. After noticing all these factors, the Director reported that for administrative reasons, specia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the goods for purposes of assessment of excise duty. It is clear to us that these guidelines have not at all been followed in fixing the tariff value of liquid chlorine by the impugned notifications. Learned Standing Counsel appearing for the respondents submitted that in addition to the guidelines furnished by section 4, it was open to the Central Government to adopt administrative reasons for purposes of fixation of tariff value and that as the price of liquid chlorine varied from factory to factory and there was no data available for captive consumption, the Government was justified in fixing the tariff value at Rs. 500/- per metric tonne. We are unable to agree with this submission. The administrative reasons for fixing tariff value which the Central Government may adopt cannot be such which go against the guidelines mentioned in section 4. The reasons for fixation of tariff values may be to bring about uniformity and to avoid difficulties in assessment. But this does not mean that the Government can fix any tariff value which bears no relation to the manufacturing cost and manufacturing profit i.e., the wholesale price charged by the manufacturer. If there is only a margina ..... X X X X Extracts X X X X X X X X Extracts X X X X
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