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TMI Blog1981 (9) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... ) directed that the revision application should be disposed of in the light of certain observations made by the Court in the course of its Order. On an appeal preferred against the aforesaid judgment of the single Judge of the Karnataka High Court, the order of the single Judge has been modified by the Division Bench of the Karnataka High Court only on one point viz., that the observations made by the learned single Judge in paras 5 and 6 of his Order would circumscribe within narrow limits the scope of determination by the Central Government and hence, those observations should not be binding on the Central Government while deciding the Revision Application. 4. The facts of the case, as already summed up in para 2 of the Court's judgment dated 4-12-1980, are that the petitioner had submitted a statement in regard to the value of the goods manufactured by it which is styled as list No. 1 of 1973 dated 18-12-1973 and it had been approved by the Central Excise Department. Subsequently, on the basis that the goods manufactured by the petitioner were being sold by M/s. Hedge Golay Pvt. Ltd., that they were also giving some technical assistance and they were selling the goods at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the petitioner should not be accepted as the real price. At the same time, he observed that this was a case in which the price was ascertainable as provided in Section 4(a) of the Central Excises and Salt Act, 1944. By this reasoning, he stated that it was not necessary to ascertain the manufacturing cost or the manufacturing profit as required under Section 4(b) and considered the price charged by Hedge Golay as the price to be taken into consideration for purposes of evaluating the excise duty payable by the petitioner. This order of the Asstt. Collector was confirmed in appeal and subsequently in revision, with the only difference, as pointed out above, that the Government of India held that it was Section 4(b) and not Section 4(a) of the Central Excises and Salt Act, 1944 which was applicable in the circumstances of the case. 5. The case was accordingly posted for fresh hearing on 6-2-81 and was adjourned to 17-3-81 at the petitioner's request. The next hearing could not, however, take place on 17-3-1981 as the decision of the single Judge was stayed by the Appellate Bench of the Karnataka High Court pending disposal by them of the appeal filed by the Department aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded that as per the ratio of the decisions of the Supreme Court in the cases of (i) A.K. Roy Others v. M/s. Voltas Ltd. 1977 E.L.T. (J 177) and (ii) Union of India v. M/s. Atic Industries (AIR 1973 SC 225 and AIR 1975 SC 1960) - 1978 ELT (J 444), excise is a tax on manufacture/production of goods and that Section 4 of the Central Excises and Salt Act, 1944 permits the inclusion of only the manufacturing cost and manufacturing profit and exclusion of all other expenses referable as post-manufacturing expenses. He, therefore, averred that the limits for the purposes of levy of duty declared by the petitioners was in conformity with the principles enunciated by the Supreme Court in the cases referred to above and therefore, the Department ought not to have taken into consideration the price at which M/s. Hedge Golay sold the goods to their customers. 8. On the question of determination of value under Section 4(b) of the Central Excises and Salt Act, 1944, the petitioner's Advocate submitted that the data regarding the value of the goods of the like kind and quality prevalent at the material time as was made known to him during the present proceedings about the sale of similar c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Department's case. At the outset, he submitted that the interpretation sought to be placed by the petitioner on the scope of the present proceedings was not correct and that the following observations of the Division Bench with regard to Writ Appeal No. 165/81 would leave no doubt on the Central Government's liberty to decide the case afresh in accordance with law, without being influenced by any of the observations of the learned single Judge in W.P. No. 4166 of 1976- "When the learned Single Judge quashed the order of the Central Government and re-submitted the matter to it for fresh decision he should have left it open to the Central Government to decide the matter afresh without being circumscribed by any observations made by him. The Central Government shall be free to decide the matter afresh without being influenced by his observations." He, therefore, submitted that it is open to the Central Government in the present proceedings to decide the matter afresh after due examination from all angles including the applicability of Section 4(a) or Section 4(b) of the Central Excises and Salt Act, 1944 and consequently pleaded for rejection of the contention of the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or otherwise nor even shown to have been made by the petitioners. (v) A cursory glance of the break-up of the price structure of the impugned goods when sold by M/s. Hedge Golay reveals that not only were such charges abnormal but also the fact that some of these items are not referable to post-manufacturing activities like the research and development, quality control, etc. and consequently the cost of such items ought-to have been included in the assessable value as per the settled law. Their retention by M/s. Hedge Golay amounts to confer extra commercial advantage to them. (vi) Even the charges alleged to have been collected by M/s. Hedge Golay towards perpetual guarantee appear to be a farce since as per their advertisement only one year's guarantee was offered. (vii) Yet another unusual phenomenon present in the transaction is the responsibility undertaken by M/s. Hedge Golay for replacements of parts which are imported and there is nothing on record to show whether M/s. Hedge Golay themselves imported such parts or these were purchased by the petitioners. (Viii) The two invoices of M/s. Hedge Golay of 1976 produced by the petitioners at the time of pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not necessarily have a commercial connection with the manufacturer. The word "favoured" is a subjective term and the fact whether a particular buyer is favoured or not has to be decided on the basis of the possible objective materials on records. On facts and circumstances of the 3S" instant case, he submitted that it is evident that the petitioners treated M/s. Hedge Golay as a favoured buyer to whom a specially low price of Rs. 1,500/- per calculator was charged. He, therefore, requested that the revision application should be dismissed. 12. Government have carefully considered the aforesaid submissions made by both sides and have also examined the records of the case. Government observe that in so far as the scope of the present proceedings is concerned, the directions given by the Division Bench of the Honourable High Court of Karnataka in Writ Appeal No. 165/81 are clear and unambiguous. The Division Bench have given full liberty to the Government of India to decide the case afresh without being influenced by any of the observations of the learned single Judge of the Karnataka High Court. 13. With regard to the merits of the case the several circumstances enumerated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the goods are sold by them to the favoured buyer could not be accepted in terms of Section 4(a) of the Central Excises and Salt Act, 1944. In such cases therefore, it is open to the Department to determine the correct assessable value of such product for the purposes of levy of Central Excise duty on the basis of the capability of sale of either the very goods themselves or capability of sale of goods of like kind and quality. Government consider that the concept of value as built in Section 4 remains materially the same irrespective of whether it is sub-section (a) or sub-section (b) of the said section whichever is invoked depending on the circumstances of the case. This view also finds support in the observations of the Honourable Supreme Court in the aforesaid Voltas' case wherein the Court have inter alia observed that- "We also think that the application of clause (a) of Section 4 of the Act does not depend upon any hypothesis to the effect that at the time and place of sale, any further articles of like kind and quality should have been sold. If there is an actual price for the goods themselves at the time and place of sale and if it is a 'wholesale cash price', the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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