9911796707
TMI Blog1982 (11) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... mely, distribution cost, onward freight, promotional expenses, cost of packing materials, picking charges and trade concession in the assessable value of the drugs and medicines manufactured by the petitioner. In this writ petition, the petitioner has attacked the constitutional validity of Section 4(1)(a) proviso (ii) of the Central Excises and Salt Act, 1944, as amended by Central Act 22 of 1975 which provides that where a price is fixed for an article under any law for the time being in force, then such price shall be deemed to be the normal price referred to in clause(a) of Section 4(1). According to the petitioner, the second proviso referred to above enables the excise authorities to equate the price fixed under any other statute on the normal price fixed under Section 4(1)(a) and if the price fixed under any other statute includes the post-manufacturing expenses incurred by the manufacturer, then such a provision which enables the authorities to include post-manufacturing expenses as well in the value to be fixed for the purpose of ad valorem duty will be contrary to the charging Section 3 which enables the levy of excise duty on the goods manufactured which normally include ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 4, the excise duty can be imposed under the Central Excises and Salt Act, 1944, only on the price of the manufactured goods, in the wholesale market. Before the amendment, Section 4(1) provided that excise duty is chargeable on any excisable commodity with reference to the wholesale price the goods will fetch if sold at the factory rate. After the amendment, Section 4(1) provides that the excise duty is chargeable on excisable goods taking its normal price, the normal price being the price at which the goods are ordinarily sold by the manufacturer to buyer in the course of a wholesale trade. Therefore, according to the learned counsel, even after the amendment, the wholesale price can only be taken as the basis for the purpose of the levy of excise duty and not the retail price which normally includes the post-manufacturing expenses incurred by the manufacturer as also the expenses incurred by the retailer and his profits. It is also contended by the learned counsel for the petitioner that the duty of excise being a duty on the manufacturer, the duty cannot be imposed on a retail price which includes not only the manufacturing cost and manufacturer's profits but also the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question elaborately after referring to an almost all the relevant decisions on the point and ultimately came to the conclusion that it is settled law that excise is a tax on production or manufacture of the goods and consequently the value of the goods for the purpose of excise duty is taken to mean only the manufacturing cost and the manufacturing profit, that it must not be loaded with post-manufacturing expenses such as selling and administrative expenses etc., and that it is one of the basic concepts of levy of excise duty that it should be levied on the basis of the sale price at the factory gate and said concept is discernible in Section 4, both before its amendment and after its amendment. The learned judge has observed as follows : - "Normally the value of the goods for levy of excise duty has to be determined with reference to the price at which the goods are sold at the factory rate. The Section 4(1)(a) as it stood prior to the amendment stated that the value of the goods with reference to the levy of excise duty shall be the wholesale cash price for which the article is sold by the manufacturer. The amended section provides that the value of excisable goods shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of wholesale trade by the manufacturer as the normal price on which the excise duty is chargeable. However, in this case, the petitioner's contention is that proviso (ii) to Section 4(1)(a) makes a departure from the normal concept of excise duty in that it allows the excise authorities to levy excise duty even on the retail price and, therefore, it should be taken to be constitutionally bad. The impugned proviso (ii) is extracted below : "Where such goods are sold by the assessee in the course of wholesale trade for delivery at the time and place of removal at a price fixed under any law for the time being in force, or at a price, being the maximum, fixed under any such law, then, notwithstanding anything contained in clause (iii) of this proviso, the price or the maximum price, as the case may be, so fixed, shall in relation to the goods sold, be beemed to be the normal price thereof." 6. According to the proviso, wherever a price or a maximum price has been fixed under any law for the time being in force, then such goods or such maximum price shall be deemed to be the normal price. This proviso enables the levy of excise duty on the maximum price under any statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot take that fixation of such retail price into account for the determination of assessable value by invoking the second proviso. In the face of the interpretion of proviso (ii) which I have chosen to adopt, that proviso cannot be held to be valid as conflicting with the charging section as also the main provision in Section 4(1)(a). However, in so far as the impugned order passed by the second respondent is concerned, as already stated, it proceeds on the erroneous basis that under proviso (ii) to Section 4(1)(a) the excise duty can be levied even on the post-manufacturing expenses. That view is obviously incorrect. The reasoning given by the second respondent in the impugned order is as follows :- "I am unable to accept the factory's contention that the post-manufacturing expenses should be deducted from the NEP for arriving at the assessable value. There are clear provisions under Section 4(1)(a) proviso (ii) of Central Excises and Salt Act, 1944, that a price fixed under any law for the time being in force the maximum fixed under any such law should form the assessable value. No provisions are made under the said section for the deduction of a so-called post-manufacturing ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
