9911796707
TMI Blog1984 (3) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... carry on business, inter alia, of manufacture of cigarettes and/or smoking mixtures. Central Excise duty under the said Act on the manufacture of cigarettes/smoking mixtures was leviable ad valorem. 3. It is the case of the petitioner that at all material times, the petitioner used to sell its own brand of cigarettes/smoking mixtures in wholesale quantities to the various stockists and/or distributors throughout the country. The prices charged from all such stockists and/or distributors were uniform throughout the country. It is alleged that the petitioner used to sell. us products to the stockists and/or distributors on principal basis and on the basis of the agreements entered into at arm's length and in their usual course of business. The stockists/distributors, after purchasing the goods from the petitioner, used to sell the same to their dealers who in their turn used to sell to the retailers. The petitioner never used to receive the price charged by the stockists/distributors from their buyers. The difference between the price at which the petitioner used to sell to its stockists/distributors and the price at which the stockists/ distributors used to sell to their buyers re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose of Section 4(a) of the Act if the agreement were made at arms length and in the usual course of business. 7. It is the case of the petitioner that after the said decision was rendered by the Supreme Court, the petitioner learnt and discovered that the assessable value of the goods manufactured by it could not be determined on the basis of the prices at which its stockists and/or distributors sold the goods to their buyers and that such assessable value could only be determined on the basis of wholesale prices at which goods were sold by the petitioner to its stockists and/or distributors. 8. The petitioner, thereafter, filed two separate refund applications before the Central Excise authorities for the period from January 20, 1972 to January 19, 1973 claiming refund of the excess excise duty realised from the petitioner by reason of determining the assessable value on the basis of the prices charged by stockists/distributors from their dealers and not on the basis of the prices charged by the petitioner from its stockists/distributors. In the said refund application an aggregate sum of Rs. 17,75,564.40 was claimed as and by way of refund. The said refund applications were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reaffirmed the principles laid down in the case of A.K. Roy v. Voltas Limited (supra) that value of an excisable article for the purpose of excise duty levy should be taken at the price at which excisable article is sold by the assessee to a buyer at arm's length in the course of wholesale trade at the time and place of removal. 11. On the other hand, Mr. Surathi Mohan Sanyal, learned Advocate, appearing for the respondent, has submitted that the impugned notice cannot be said to be without jurisdiction. Whether the principles laid down in the several decisions of the Supreme Court as relied on by the Counsel for the petitioner would be applicable to the facts of the case have to be determined by the Board. It is absolutely necessary to investigate the facts. It is the contention of Mr. Sanyal that the Assistant Collector did not have any jurisdiction to grant the refund and accordingly the Board was within its competence to review the order granting the refund. He has also submitted that this Court cannot find out the facts which are necessary for the purpose of determining the question with regard to the entitlement of the assessee to get the refund. He submits that the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facie are untenable. Where there is a conflict in judicial decisions concerning the interpretation of the provisions of Central Excises and Salt Act, the Excise Authorities may, in a proper case, adopt one interpretation or the other so long as the controversy is not finally settled by the Supreme Court. But where a section of the Act has been construed by the Supreme Court and the Supreme Court has laid down the law in no uncertain terms, even then if a statutory authority issues a notice containing the grounds on a misreading and misinterpretation of the law laid down by the Supreme Court, it cannot be said that it is a mere misapplication of .the section and the Revenue Authorities have the right to decide either way. It goes to the root. The impugned notice is based on erroneous interpretation of statutory provision and on a clear disregard of the principles laid down by the Supreme Court in the case of A.K. Roy v. Voltas (supra) as well. It is a case where the Revenue Authorities are proceeding without jurisdiction or upon on erroneous decision on jurisdictional fact. Thus there is error of law apparent on the face of the impugned notice itself and as such it is without jurisd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sense of the term at or near the place of manufacture where the articles of a like kind and quality are or could be sold, that would not in any way affect the existence of market in the proper sense of the term provided the articles themselves could be sold wholesale to traders, even though the articles are sold to them on the basis of agreements which confer certain commercial advantages upon them." 16. At page 230 Supreme Court observed thus : "We do not think that these decisions, insofar as they hold that the price of sales to wholesale dealers would not represent the "wholesale cash price" for the purpose of Section 4(a) of the Act merely because the manufacturer has entered into agreements with them stipulating for commercial advantages, are correct. If a manufacturer was to enter into agreements with dealers for wholesale sales of the articles manufactured on certain terms and conditions, it would not follow from that alone that the price for those sales, would not be the 'wholesale cash price' for the purpose of Section 4(a) of the Act if the agreements were made at arm's length and in the usual course of business." 17. The effect of the said decision of the Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aced before me contradicting any of the facts which formed the basis of the claim of the petitioner to the refund. This then was the position when the impugned notice was issued by the Board. If that be the position, the Board acted without jurisdiction in issuing the impugned notice seeking to revise the order of refund. The principles laid down by the Supreme Court in the case of A.K. Roy (supra) have been reiterated in the subsequent decisions of the Supreme Court. In the case of Atic Industries Limited (supra), the Supreme Court held at page 968 of the Report as follows :- "There can, therefore, be no doubt that where a manufacturer sells the goods manufactured by him in wholesale to a wholesale dealer at arm's length and in the usual course of business, the wholesale cash price charged by him to the wholesale dealer less trade discount would represent the value of the goods for the purpose of assessment of excise. That would be the wholesale cash price for which the goods are sold at the factory gate within the meaning of Section 4(a). The price received by the wholesale dealer who purchases the goods from the manufacturer and in his turn sells the same in wholesale to other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of this case. This basis of the determination of the assessable value was only changed without there being any change in facts which were already there on records. This ground, therefore, fails. 23. The next allegation in the impugned notice is that the said order of refund was without jurisdiction as the succesor Assistant Collector was not competent to reopen and revise the assessable value, which stood settled and finalised already by his predecessor-in-offices and grant refund based on a decision which he was not competent to take. Mr. Sanyal has supported the said ground and submitted that the successor assistant Collector has no jurisdiction to entertain the applications for refund of the petitioner. It is, his contention that once the assessable value has been determined by the Assistant Collector it cannot be revised on any ground by his successor. It can only be done by his superior officer. I am unable to accept the contention of Mr. Sanyal. Under Rule 11 of the Central Excise Rules, 1944 (as it stood at the material time) read with Rule 173J the proper officer was empowered to refund the duty paid through inadvertence, error or misconstruction, if the applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able value of the goods manufactured by the petitioner was determined by the Excise Authority erroneously. The new fact is that in view of the principles laid down by the Supreme Court in the case of A.K. Roy (supra) the basis of the determination of the assessable value was changed and as such the assessments made so long by the Excise Authority were erroneous. This is the reason why the petitioner claimed for refund. The claim of refund was made only in respect of excess duty realised by the Excise Authorities determining the assessable value on the prices at which the petitioner's stockists/distributors sold to their dealers. 25. Another ground in the impugned notice is that the Assistant Collector did not enquire whether or not the transactions on which the petitioner claimed assessment and consequential refund were really at arm's length. This ground has no substance. In the price lists filed by the petitioner, details of the prices charged by it to its stockists/distributors as also the prices charged by the stockists/distributors to their dealers were given. The discount allowed by the petitioner to its stockists/distributors was only 1% to 2%. This is evident from the cop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value. The ground, in my opinion, • is wholly untenable. As indicated earlier, the reason for claiming the refund was that the basis of the determination of the assessable value was changed in view of the principles enunciated by the Supreme Court in the case of A.K. Roy (supra). The refund claim was only in respect of the excess duty realised by the Excise Authorities by determining the assessable value on the prices at which the petitioner's stockists/distributors sold to their dealers and not on the prices at which the petitioner sold goods to its stockists/distributors. All the facts and figures relating to the said prices were contained in the price lists approved by the Excise Authorities. In the refund applications, the petitioner specifically mentioned the ground on which the refund was being claimed by it. The Assistant Collector, who granted the refund, examined all the relevant facts and after being satisfied, he allowed the refund claims. The fact that the Assistant Collector applied his mind to the claims made by the petitioner for refund would be evident from his order rejecting the claim for refund for an earlier period on the ground of limitation although the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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