9911796707
TMI Blog1980 (9) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... freight, special packing charges and so on. The petitioner claimed that the wholesale cash price or the dutiable value should be arrived at by deducting the following percentages from the retail sale price : Cartage 5% Trade Discount 25% Railway Freight 3% Advertisement 11-1/2% Distribution 7-1/2% Breakage 10% Total 62% 2. The petitioner from time to time submitted its consumers' price list which was accepted by the Revenue after deducting the expenses attributable to post-manufacturing process referred to above. However, in the year 1962 the Supdt, Central Excise, did not allow discount and other expenses referred to above but only allowed trade discount to the extent of 12-1/2%. The petitioner made a representation to the Asst. Coll. of Central Excise who by his order dated 30-3-1962 allowed a trade discount of 25%. An appeal was rejected on a technical ground. There was a further revision preferred to the Government which resulted in the allowance of a trade discount of 25% and cartage of 5% from the retail sale price. The balance of the claim in regard to 32 of the retail sale price was disallowed. 3. Thereupon the petitioner preferred C.W. 545/67 in this court. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted by the Court." The refund determined by the Assistant Collector was actually made to the petitioner on 26-2-1974. 5. Thereafter, on 6th November, 1974 the successor Assistant Collector issued a notice purporting to be under Rule 10 of the Central Excise Rules. He was of opinion that the allowance of deduction on account of breakage from the retail price at 10% made in the order dated 10-10-1973 was not correct inasmuch as "no actual expenditure was incurred on account of insurance. What the court had allowed was only insurance charges". He, therefore, proposed to revise the earlier order and to call upon the petitioner of refund the excess amount of Rs. 1.25 lacs paid over to him as a result of the earlier determination. It may be mentioned here that the refund granted as well as the claim for recovery of a part of the excise refund allegedly made related to the years 1961 to 1966. 6. The petitioner filed reply to the show cause notice on 27th November, 1974. It was submitted that the loss on account of breakage was claimed because the retail prices had been loaded by 10% to cover the loss of breakage in transit. It was stated that instead of getting the goods insured wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osing to revise the order dated 25th October, 1975 passed by the Appellate Collector. After obtaining the petitioner's reply and affording an opportunity for personal hearing, the Government revised the order dated 25th October, 1975 and restored the order of the Assistant Collector dated 25th March 1975. According to the revisional authority, the High Court had merely laid down certain principles and directed the Department to work out the admissible deduction on the basis of the principles set out in the judgment. The court referred only to insurance charges as being eligible for deduction. But what the petitioner claimed before the Appellate Collector was not insurance charges but a breakage allowance which was a totally different concept from the concept of insurance. In the view of the Government the order of the Appellate Collector holding that the breakage allowance was admissible on the ground that it was an insurance allowance was clearly wrong. The Assistant Collector was also held justified in taking action under the provisions of Rule 10. This order of the Government is dated 27th July, 1979 and has given rise to this writ petition. 9. Before proceeding to deal with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een owing to any such cause, erroneously refunded the proper officer may, within the three months from the date on which the duty or charge was paid or adjusted in the owner's account current if any or from the date of making the refund, serve a notice on the person from whom such deficiency in duty or charges is or are recoverable requiring him to show cause to the Assistant Collector of Central Excise why he should not pay the amount specified in the notice. (ii) The Assistant Collector of Central Excise, after considering the representation if any, made by the person on whom notice is served under sub-rule (1), shall determine the amount of duty or charges due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined within ten days from the date on which he is required to pay such amount or within such extended period as the Assistant Collector of Central Excise may, in any particular case, allow." It will be seen at once that the first contention urged by the learned Counsel for the petitioner is untenable. In the very nature of the levy of excise duty, the initial decision to levy or not to levy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It said these are with reference to Rule 10 : `We are not inclined to accept the contention of Dr. Syed Mohammed that the expression "levy" in Rule 10 means actual collection of some amount The charging provision section 3(1) specifically says, "there shall be levied and collected in such a manner as may be prescribed the duty of excise. It is to be noted that sub-section (1) used both the expressions "levied and collected" and that clearly shows that the expression "levy" has not been used in the Act or the Rules as meaning actual collection.' `We are, therefore, unable to accept the view that, merely because the "account current", kept under the third proviso (erroneously mentioned as second proviso by the Division Bench) to Rule 9, indicated that an accounting had taken place, there was necessarily a legally valid or complete levy. The making of debit entries was only a made of collection of the tax. Even if payment or actual collection of tax could be spoken of as a defacto "levy" it was only provisional and not final. It could only be clothed or invested with validity after carrying out the obligation to make an assessment that justify it. Moreover, it is the process of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence to Rule 10 as well as Rule 11. Rule 10 relates to the recovery by the department in case of short levy or excess refund whereas Rule 11 gives the assessee a right to ask For refund where he finds that the Department has collected more duty than it ought to have. The ambiguities in Rule 173-J are (i) that its heading refers to "short levy" which is only one of the two eventualities mentioned in Rule 10 and to "refund of excess levy" which is the subject-matter of Rule 11 giving scope for an argument that the other eventuality of Rule 10 viz. erroneous refund of a proper levy is not covered by it; and (ii) that it refers to Rules 10 and 11 applying "to the assessee", thus giving scope for an argument that it does not apply to the Department acting under Rule 10. But we agree with Mr. Chandrasekheran that these are minor lapses in drafting and that the rule fully applies to the present case. There is no logical reason why the rule should attract the applicability of Rule 10 only in respect of one of the two eventualities; the reference in the title to Rule 173-J is really a broad reference to the contents of Rule 10 and should not be read as limited only to one type of action tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee is really seeking is to exclude from the manufacturing cost the cost of manufacture of a part of the goods manufactured which after their manufacture and removal from the factory, are lost to the assessee and that too not on the basis of actualities but on estimate. We do not think that the fact of the assessee's claim being based on an estimate can vitiate it but we find substance in Mr. Chandrashekheran's contention that the allowance of this loss will really result in the exclusion from the excisable value the manufacturing cost of a part of the excisable goods. The goods attract excise duty at the point of manufacture and removal section 3, Rule 9 and 49); their loss to the assessee subsequently is immaterial from the point of view of excise duty. We have, therefore, come to the conclusion that plausible as the assessee's claim may sound, the claim of the assessee will really result in the reduction from the sale price a portion of the element of the assessee's manufacturing cost included in it, which is the subject matter of levy. This loss cannot be approximated to insurance premium paid for breakage in transit for purposes of sale which will clearly be a post-manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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