9911796707
TMI Blog1991 (7) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Railway Board supplies wheel-sets, axle boxes and various other finished components of wagons to the appellant which are termed as "free supply items". These items are not manufactured by the appellant. The readymade "free supply items" are made available to the appellant by the Railway Board without charging any price. These items are fitted in the wagons manufactured by the appellant and are ultimately supplied to the Railway Board. The invoice value of the wagon charged by the appellant from the Railway Board does not include the value of the "free supply items". 2. On the above facts, the short question for our determination is whether the excise duty under Sections 3 and 4 of the Central Excises and Salt Act, 1944 (hereinaft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hanism of the petitioner at all. Therefore, the excise value of the wagons manufactured by the petitioner cannot be calculated after adding back the price of the components supplied free of cost by the Railway Board." 4. The Union of India filed appeal against the judgment of the learned Single Judge which was heard by a Division Bench of the Calcutta High Court. The Bench did not agree with the reasoning and conclusions of the learned Single Judge, set aside his judgment and dismissed the writ petition of the appellant-petitioner. The Division Bench allowed the appeal in the following words : "Admittedly, in this case, the cost of wagon as a whole has not been mentioned in the agreement and we feel that the cost of normal price should in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the said petitioners and with such manufacture, the process of manufacture would be complete under Section 2(f) of the said Act and the liability to duty will also be attracted. We hold that the value of the manufactured goods must be determined at the factory gate i.e. at the stage when the manufactured goods here in this case wagons, leave the factory." 5. This appeal, against the judgment of the High Court, via special leave petition is by M/s. Burn Standard Company Limited. 6. The relevant parts of Sections 3 and 4 of the Act are reproduced hereinafter: "3. Duties specified in the First Schedule to be levied. - (1) There shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old by the manufacturer. It is not disputed that the appellants are manufacturers of wagons. What comes down from the assembly-line of the appellant's factory is a complete wagon and as such the appellant being manufacturer of wagons, is liable to pay duty of excise on the value of a complete wagon. The "free supply items" like wheel-sets, etc., in the process of manufacturing become part of the complete wagon and lose their identify. It hardly matters how and in what manner the components of the wagon are procured by the manufacturer, so long as the appellant is manufacturing and producing the goods called "wagons" it is liable to pay duty of excise on the normal value of the wagon. In Empire Industries Limited and Others v. Union of India ..... X X X X Extracts X X X X X X X X Extracts X X X X
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