9911796707
TMI Blog1994 (9) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... another price list in Part-II for selling Depot sale simultaneously. He may also file price list in other Part i.e. from Part II to VII depending upon pattern of sales etc. as per requirement under Section 4 ibid." 2.Annexure D-I is a notice on the subject of determination of assessable value under Section 4. By that notice the Company was directed to submit a separate price list in proper form for the depot sales w.e.f. 6-4-1987 alongwith sufficient documents covering factory gate sales as well as depot sales for determination of correct assessable value. By Annexure D-2 it was stated "that as regards sale of your subject products from different sale depots you should submit a separate price list in proper form for approval of assessable values in question". Annexure D-3 is also a direction to submit a separate price list in proper form for sales of plywood products from different sale depots w.e.f. 11-3-1987. Annexure E-1 is also a notice by which the petitioner was requested to submit a separate price list in proper form for depot sales w.e.f. 6-4-1987. Annexure E-2 is a notice in pursuant to Trade Notice No. 2/87 dated 1-4-1987 issued by the Assistant Collector of Customs an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng sold at the time of the removal of the article chargeable with duty from the factory or any other premises of manufacture or production for delivery at the place of manufacture or production, or if a wholesale market does not exist for such article at such place, at the nearest place where such market exists, or where such price is not ascertainable, the price at which an(b) article of the like kind and quality is sold or is capable of being sold by manufacturer or producer, or his agent, at the time of the removal of the article chargeable with duty from such factory or other premises for delivery at the place of manufacture or production, or if such article is not sold or not capable of being sold at such place, at any other place nearest thereto. Explanation. -In determining the price of any article under this section, no abatement or deduction shall be allowed except in respect of trade discount and the amount of the duty payable at the time of the removal of the article chargeable with duty from the factory or other premises aforesaid." Parliament enacted XXII of 1973 which substituted a new Section 4 for the original provision with effect from October 1, 1975. The ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce for delivery at a place other than the place of removal, the cost of transportation from the place of removal to the place of delivery shall be excluded from such price." It is stated by the petitioner that Section 4(1)(a) embodies the concept of factory gate sale which is the basis of determination of value of the goods for the purpose of excise duty. This sale, of course, is subject to other conditions mentioned in the section. Section 4(2) of the Act postulates that when the price of any excisable goods at the place of removal is not known and the value thereof is determined with reference to the price for delivery at a place other than the place of removal, the cost of transportation from the place of removal to the place of delivery shall be excluded from such price.It is contended that it has been inconsistently held by the Apex Court under the old Section 4(a) that the value of an excisable article for the purpose of levy to excise duty should be taken to be the price at which the excisable article is sold by the assessee to a buyer at arm's length in the couse of the wholesale trade at the time and place of removal namely, at the factory gate. It is further contended t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner company under Rule 173C was approved by the authority and the Comapny has been clearing all the goods manufactured by it after payment of duty on the assessable value determined with reference to ex-factory wholesale prices in accordance with such price lists. The petitioner company has also been submitting monthly returns in Form No. RT 12 along with copies of the gate passes of the goods cleared from the factory. The Respondents made final assessment in respect of Central Excise duty payable to the petitioner company on the basis of separate orders for different period of time. The respondent No. 2 purported to issue a Trade Notice No. 2/87 dated 1-4-1987 (Annexure-C) the Respondent No. 2 asked the petitioner company to file one price list in Part-I for the factory gate sale and another price list in Part-II for its depot sales. Thereafter communications dated 6-4-1987, 9-4-1987 and 23-4-1987 were received by the petitioner company from Respondent No. 2 asking the company to submit separate price lists in proper form for its gate sales/depot sales for determination of correct assessable value. These three communications are Annexures D-1, D-2 and D-3 respectively. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 37, which reads as follows :- That with regard to the statement made in para 37 of the"34. writ petition the deponent begs to state that Trade Notice issued is not a supplemental instructions. The instructions were issued as per Board's letter F. No. 35/16/36-CX dated 19-9-1956 for assessees' guidance. That with regard to the statement made in para 38 of the35. writ petition, the deponent begs to state that the Trade Notice dated 1-4-1987 was issued for submission of price list and classification list correctly under Rule 173C of the Central Excise Rules, 1944. That with regard to the statement made in para 39 of the36. writ petition, the deponent begs to state that it is a general instruction issued to all assessees for their guidance under Board's letter as mentioned in para 37. That with regard to the statement made in para 40 of the37. writ petition, the deponent begs to state that even if the trade notice is treated as null and void, the actual position of submission of price list in Part II in accordance with Section 4(1)(a) proviso (i) remains unaffected as because the assessees were not asked for submission of price list in pursuance of this Trade Notice, but on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iling of price list and valued the goods in a part manner is unauthorised by law. The Trade Notice dated 1-4-1987 is without any authority of law and as such it is violative of the Article 226 of the Constitution of India. Civil Rule No. 1388/87 11.This Civil Rule has been filed by Shri S.M. Dutta, Executive Director, Sarada Plywood Industries Ltd. and Shri P.D. Chitlangia, Managing Director, Sarada Plywood Industries Ltd. The prayers made in the writ application are to quash the notice dated 30-11-1987 vide Annexure-C and restraining the defendents from taking any action vide notice dated 30-11-1987. 12.The brief facts are as follows :- That the price lists submitted by the Company were approved and final assessment was made by the authority in respect of Central Excise duty. Further, the show cause notice as alleged that the company sold about 90 per cent of the goods manufactured by its different branches/depots located in various parts of the country and the factory gate sale prices cannot be the value of their products for the purposes of Section 4 of the Act and the Rules and that the prices at which the goods were sold from the depots should be the assessable value o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcise duty. It is also stated that the company submitted price list and same was approved by the authority. It is also stated that the taxes were assessed and adjudicated. The respondents issued show cause notice for a tune of Rs. 49,18,205.90. for the period from 1-4-1982 to 19-3-1986. 15.An affidavit-in-opposition has been filed on behalf of the respondents on the same line as in the other cases. C.R. No. 592/87 16.This Civil Rule has been filed by the Sarada Plywood Factory Pvt. Ltd. in regard to the validity and legality of show cause notice dated 29-1-1987 Annexure-B to the writ application. This show cause notice is for Rs. 1,24,99,453.48 ps. for the period from 1-1-1982 to 31-12-1982. The other facts are same. An affidavit in opposition and affidavit-in-reply has been filed. C.R. No. 1387/87 17.This Civil Rule has been filed by M/s. Sarada Plywood Industries Pvt. Ltd. for challenging the legality and validity of show cause notice dated 30-11-1987 Annexure-C to the writ application. The show cause notice is for Rs. 1,28,00,673.29. for the period from 1-1-1983 to 15-4-1984. The other facts are same. C.R. No. 593/87 18.This Civil Rule has been filed by M/s. Sarada ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be regulated by the statute and principles for guidance of the said Tribunals may also be prescribed, subject of course to the inevitable requirement that these provisions do not contravene the fundamental rights guaranteed by the Constitution. But what law and the provision of law may legitimately do cannot be permitted to be done by administrative or executive orders. 20.That apart, in paragraph 34 of the affidavit-in-opposition it is admitted as follows :- That with regard to the statement made in paragraph 37 of"34. the writ petition the deponent begs to state that Trade Notice issued is not a supplemental instructions. The instructions were issued as per Board's letter F. No. 35/16/36-CX dated 19-9-1956 for assessees' guidance." So, the admitted position is that as per guidance this Trade Notice was issued. Mr. Lahoty contends that the Trade Notice cannot be issued under Rule 233 of the Rules and as such the same is liable to be struck down. He further submits that this Trade Notice has interfered with the power of the quasi-judicial authority under the Act and on this ground also this should be quashed and in this connection he placed reliance on the following decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Government." 21.In 1978 (2) E.L.T. (J 382) (SC) = AIR 1970 (2) SC 1493 [Orient Paper Mills Ltd. v. Union of India, Respondents, the Supreme Court has held as follows :- According to learned Attorney General the assessment"5. proceedings are not of a quasi-judicial nature nor is the assessing authority a quasi-judicial authority. We are unable to agree. It is apparent from the judgment referred to above and numerous other decisions of this court delivered in respect of various taxation laws that the assessing authorities exercise quasi-judicial functions and they have duty cast on them to act in a judicial and independent manner. If their judgment is controlled by the directions given by the Collector, it cannot be said to be their independent judgment in any sense of the word. An appeal then to the Collector becomes an empty formality. In the previous decision of this court mentioned above, the appeal and the revision had been rejected by the Collector and the Central Government on the ground that a direction had been issued by the Central Board of Revenue to the effect that the paper in question be treated as belonging to a particular classification. This court entertained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion against such Trade Notice, and in that view of the matter also an application under Article 226 of the Constitution of India was maintainable before the High Court. 23.In 1980 (6) E.L.T. 428 (Del.) [Appollo Tyres Limited and Others v. Union of India and Others] wherein the Delhi High Court in paragraph 19 has pointed out as follows :- This is a Division Bench decision of this Court which we"19. respectfully follow. This decision was, in fact, followed by a Single Bench decision of this Court in the case of Madras Rubber Factory Ltd. v. Union of India and Others, reported as 1979 (4) E.L.T. (J 173). It was observed that it is not open to the Board, in the administrative capacity to issue directions to various subordinate authorities exercising quasi-judicial functions to interpret excise rebate in a particular manner and to restrict relief thereunder. Any quasi-judicial order issued on the basis of such direction was held to be illegal and void. The learned Judge further observed that when there was no specific condition in the statutory notification that the benefit of rebate should be passed on to the consumer, the manufacturer is eligible for the benefit of rebate of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Central Board of Revenue dated 29th December, 1955 which, inter alia, mentioned that battery grade manganese ore in the form of course powder was correctly assessable under Item No. 28 of the Indian Customs Tariff. It seems to us that the appellants issued the impugned notice to show cause on the basis of the said direction and/or ruling contained in the Central Board of Revenue's order dated 29th December, 1955." It is well settled that the assessing authority acting as"34. quasi judicial authority cannot decide the issue before it on the basis of any surmise or on the basis of any ruling or direction issued by any authority, howsoever high it is. Such ruling or direction of the higher authority such as the Central Board of Excise and Customs may be binding on the officers subordinate to it, but not binding on any authority acting in the capacity of a quasi-judicial authority. Such direction or any interpretation given by any other administrative authority may be taken into consideration but should not form the basis of any decision arrived at by any quasi-judicial authority." 27.Shri K.N. Choudhury, learned counsel appearing for the respondents submit that this Trade N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncerned Range Superintendent well in advance so that necessary action can be initiated as per Rule 173C(5) and 173B ibid from this and to give effect of the price list in question. Subject to the provisions of Rule 173C, no assessee shall clear any goods from a factory, warehouse or other approved place of storage unless the price list is approved by the proper officer. Where the assessee sells their commodities at the factory gate, as per Section 4(a)(a) as well from Sale Depot as per Section 4(2) of the Central Excises and Salt Act, 1944, if wholesale sale and unit billing price at those two points of sale is different he shall likewise file one price list in Part-I for depot sale simulteneously. He may also file price list in other Part i.e. from Part-II to VII depending upon pattern of sales etc. as per requirement under Section 4 ibid. As regards classification list, every assessee shall file one classification list covering all assessable goods produced/manufactured by him direct to the approving authority under Rule 173B(i) with a copy to concerned Range Officer and if in the list approved by the proper officer, any alteration becomes necessary, the assessee shall likewi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Board. Further, the method of valuation of excisable goods is laid down in Section 4 of the Act. The Board cannot prescribe different methods of valuation by issuing supplemental instructions, the assessing authority is not bound by the direction issued under the authority of the Board. This being the position, I hold that this trade notice is without authority of law and the same is liable to be set aside which I hereby do. 31.The next question which arises for decision is that whether in the facts and circumstances of this case and on the basis of admitted position, there is an obligation and on requirement in law to submit a separate price list for the depot sale of the petitioners company, whether demanding to submit separate price list is illegal and unjustified for valuation of excisable goods for determination under Section 4(I)(a) or under Section 4(2) of the Act. Under the facts and circumstances of this case the petitioners' company was asked to submit a separate price list for valuation of excisable goods for determination under Section 4(I)(a) or under Section 4(2), whether it is illegal and unjustified. It is also settled law that when valuation can be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the `wholesale cash price' has to be20. ascertained only on the basis of transactions at arm's length. If there is a special or favoured buyer to whom a specially low price is charged because of extra-commercial considerations, e.g. because he is relative of the manufacturer, the price charged for those sales would not be the `wholesale cash price' for levying excise under Section 4(a) of the Act. A sole distributor might or might not be a favoured buyer according as terms of the agreement with him are fair and reasonable and were arrived at on purely commercial basis. Once wholesale dealings at arm's length are established, the determination of the wholesale cash price for the purpose of Section 4(a) of the Act may not depend upon the number of such wholesale dealings. The fact that the appellant sold 90 to 95 per cent of the articles manufactured to consumers direct would not make the price of the wholesale sales of the rest of the articles any the less the `wholesale cash price' for the purpose of Section 4(a), even if these sales were made pursuant to agreement stipulating for certain commercial advantages, provided the agreements were entered into at arm's length and in the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eable with duty from the factory or any other premises of manufacture or production for delivery at the place of manufacture or production, or if a wholesale market did not exist for such article at such place, then delivery was envisaged at the nearest place where such market existed." There can, therefore, be no doubt that where a manufacturer"23. 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 dealers would be irrelevant to the determination of the value and the goods would not be chargeable to excise on that basis." It will be noticed that the basic scheme for determination"32. of the price in the new Section 4 is characterised by same dichotomy as that observable in the old Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the buyer is not a related person within the meaning of sub-section 4(c) of Section 4 and the price is the sole consideration for the sale. This proposition is subject to the terms of the three provisos to sub-section (a) of Section 4; Where the price of excisable goods in the course of wholesale(ii) trade for delivery at the time and place of removal cannot be ascertained for the reason that such goods are not sold or for any other reason, the nearest ascertainable equivalent thereof determined in the manner prescribed by the Central Excise (Valuation) Rules, 1975 should be taken as representing the excisable value of the goods; Where the wholesale price of any excisable goods for(iii) delivery at the place of removal is not known and the value thereof is determined with reference to the wholesale price for delivery at a place other than the place of removal, the cost of transportation from the place of removal to the place of delivery should be excluded from such price." 36.He has also relied on 1988 (36) E.L.T. 723 (SC) = (1988) Supplement SCC 658 [M/s. Indian Oxygen Ltd. v. Collector of Central Excise]. In this case the Supreme Court has pointed out that if the price at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a place other than the place of removal then alone the price of goods in regard to which transactions are made through Branch offices becomes relevant. Likewise the price list effective in different depots all over India cannot have relevance to determine the value of goods for purposes of charging excise duty under clause (a) of Section 4(1). 37.At the back-drop of the case law as enunciated above, the following proposition emerges. After the amendment the criteria for valuation is :- The normal price at which such goods are ordinarily sold by(i) the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal where the buyer is not a related person and the price is the sole consideration for the sale; The only relevant price for assessment of value of the goods(ii) for the purpose of excise in such a case would be the wholesale cash price which the manufacturer receives from sale to the first wholesale dealer, that is, when the goods first enter the stream of trade. It is the first immediate contract between the manufacturer and the trade that is made decisive for determining the wholesale cash price which is to be the measure of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in question are such that they or their like kind and quality are not readily available in the market, it does not mean that their value cannot be ascertained. Nor it is necessary for a wholesale market to exist that there should be a large number of wholesales. Even one sale may, in certain circumstances, be representative of a wholesale market as pointed out in the case of A.K. Roy (supra). The quantum of goods sold by a manufacturer on wholesale basis is entirely irrelevant. The mere fact that such sale may be few or scanty does not alter the true position. [see P.C. case of Ford Co. v. Secretary of State AIR 1938 P.C. 15]. 38A.It is apparent that for the purpose of determing the "value", broadly speaking both the old Section 4(a) and the new Section 4(I)(a) speak the price for sale in the course of wholesale trade of an article for delivery at time and place of removal, namely, the factory gate. Where the price contemplated under the old Section 4(a) or under the new Section 4(I)(a) is not ascertainable, the price is to be determined under the old Section 4(b) and the New Section 4(I)(b) but whereas the price under Section 4(I)(a) is ascertainable it is that price which will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice is not the value of their product for the purpose of Section 4 of the Act. So, the authority is entitled to assess the value of the said goods under Section 4(2) of the Act. As the factory gate sales is not the basis for determining the value of the goods, this show cause notice stands quashed. In C.R. No. 593/87 the show cause notice is Annexure-B dated 29-1-1987. There also it is stated that there are factory gate sales and 90% of their production is marketed through their branches/depots. So, the authority wanted to redetermine the value by applying Section 4(2) of the Act. As the factory gate sale is the basis for assessment the value of goods this show cause notice stands quashed. In C.R. No. 592/87 the show cause notice is dated 29-1-1987 vide Annexure-B to the writ application. There also it is stated that there are also factory gate sales and 90% of their production is marketed through their branches and they wanted to assess the value under Section 4(2) of the Act. As indicated earlier this cannot be done and accordingly this show cause notice stands quashed. In C.R. No. 1242/88 the show cause notice is at Annexure-I dated 8-4-1987. Annexure-I shows that they wan ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
