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TMI Blog1983 (4) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, the Central Government issued on 29th May 1971 a notification, being Notification No. 101 of 1971-C.E., exempting motor vehicle parts, which were therein specified, from the whole of the duty of excise leviable thereon, provided (a) it was proved to the satisfaction of the Collector of Central Excise that the said parts were intended to be used as original equipment parts by the manufacturers of motor vehicles falling under Item No. 34 of the First Schedule to the Act and (b) in relation to any concession in respect of such parts, the procedures set out in Chapter X of the Rules providing for remission of duty on goods used for special industrial purposes was followed. 4. To avail of the said exemption, the petitioners made, under Rule 192 of Chapter X of the Rules, the requisite application to the Collector of Central Excise for receiving the said parts from the manufacturers thereof without payment of excise duty. This application was granted. The petitioners thereupon received the said parts from the manufacturers thereof without payment of excise duty which otherwise and but for the exemption would have been payable thereon. Subsequently, in 1973-74 the petitioners fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e department consequently was entitled to proceed on the basis of a provisional assessment initially. Contention to the contrary was in the circumstances rightly not pressed or pursued. 7. Before proceeding further, it may be mentioned that there is no dispute that the petitioners, on diversion of the surplus parts, became liable to pay excise duty thereon at a rate (20 per cent ad valorem) in force at the time of the said diversion. 8. The main questions arising for determination in this petition are : (1) How is the value of the diverted goods to be determined? (a) Is it the price or the value for which the goods on diversion were sold by the petitioners in the market? Or (b) Is it the value thereof in terms of Section 4 of the Act? (2) If the value is as per (b) supra i.e. in terms of Section 4 of the Act, question next is : Which is the relevant point of time qua which the said value is to be fixed? (i) Is it the time when the goods in question were actually manufactured or produced? Or (ii) Is it the time when the same were sold by the manufacturers to the petitioners free of excise duty under the exemption obtained? or (iii) Is it the time when the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f excise duty nor result in expanding, widening or enlarging the scope and ambit thereof. 11. Applying these tests and principles to the present case, was the department justified in taking the value of the diverted surplus parts here to be the price or the value for which the same, on diversion, was sold in the market by the petitioners? Obviously not. Such price or value would have the effect of converting the levy thereon into one of tax on the sale of goods i.e. sales tax which tax was not only beyond the purview of the Act here but also beyond the legislative competency of Parliament by virtue of Article 246 read with Entry 83, List I, Seventh Schedule of the Constitution (unless covered by Entry 92A of the said List I) and within the exclusive jurisdiction and competency of the State Legislature vide Entry 54, List II, Seventh Schedule of the Constitution. Such value and demand based thereon per se militates against the basic concept of excise which, as indicated, is a tax on manufacture or production and nothing else. Such value is neither the wholesale cash price under Section 4(a) nor the price under Section 4(b) of the Act. The impugned demand based on the petitioners' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere till then exempted, became liable to excise duty. The goods, which were originally excisable but had in the interregnum ceased to be so, revived their original character and became excisable. And the value thereof for assessing excise duty payable thereon would obviously then be the wholesale cash price at the factory gate of the original manufacturers in terms of Section 4(a) or where such price is not ascertainable, the price in terms of Section 4(b) of the Act. This decides the first question. 14. Question next is which is the relevant point of time qua which the said value in terms of Section 4 of the Act is to be determined or fixed? As indicated in question No. 2 framed in the earlier part of this judgment, is it the point of time (a) when the goods in question were actually manufactured or produced or (b) when the same were sold by the manufacturers to the petitioners free of excise duty under the exemption obtained or (c) when the same were later diverted by the petitioners and sold in the market? Section 3 of the Act does not itself specify the point of time in this behalf. Now, in this respect, the first indicated point of time viz., when the goods in question were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny, applicable to such goods, would be the rate and valuation, if any, in force on the date of actual removal of the goods from the applicant's premises. This date in the present case would be the date of diversion of the surplus i.e. the date when the surplus parts were removed from the petitioners' premises and sold in the market. Now, if this date of diversion is the relevant date for determining the rate of duty and the tariff valuation, if any, there is no good reason why for determination of value under Section 4 of the Act, not the same date of diversion but some other date (e.g. the date of the original sale by the manufacturers to the petitioners) should be considered as the relevant date. Rule 196A makes it clear that the relevant date for rate of duty and tariff valuation need not necessarily be the date of the original sale by the manufacturers to the petitioners and that it can as well be some other or another date. If so, it stands to reason that this some other or another date should be a uniform date qua all the three elements or factors viz. rate of duty, tariff valuation, if any, and value determination under Section 4. It could not be the intention to apply today ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence to which the value of the diverted parts here has to be determined would thus be that date or point of time when the said parts were diverted by the petitioners and sold in the market. It may incidentally be noted in this context that the petitioners' own contention in their appeal under Section 35 of the Act was virtually the same : "... the assessable value of the goods in question has to be determined with reference to the wholesale cash price prevalent at the place of manufacture on the crucial date viz., the date on which the appellant disposed of the goods and not with reference to the price charged by the appellant in the course of subsequent transaction..." (vide ground No. 3 at page 64 of the petition) 17. To summarise : For assessing the excise duty payable thereon, the value of the surplus parts diverted and sold in the market would be the wholesale cash price thereof at the factory gate of the original manufacturers thereof, in terms of Section 4(a) or where such price is not ascertainable, the price in terms of Section 4(b) of the Act and the relevant date or the point of time with reference to which this value has to be determined would be the date or the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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