COMMISSIONER OF CENTRAL EXCISE, LUCKNOW, U.P. versus M/S. CHHATA SUGAR CO. LTD.

Citation: [2004] 2 S.C.R. 790 · Decided: 27-02-2004 · Supreme Court of India · Bench: V.N. KHARE · Disposal: Dismissed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

e 
A 
COMMISSIONER OF CENTRAL EXCISE, LUCKNOW, U.P. 
B 
c 
v. 
MIS. CHHA TA SUGAR CO. LTD. 
FEBRUARY 27, 2004 
[V.N. KHARE CJ., S.B. SINHA AND S.H. KAPADIA, JJ.] 
Central Excise Act, 1944-Section 4, 4(/)(a), 4(4)(d)(ii)-U.P. Sheera 
Niyantran Adhiniyam, 1964-Section 8(4), (5) and section JO-Assessable 
value of molasses for purposes of levy of excise duty-Determination of~ 
Whether administrative charges collected by sugar fact01y from buyers on 
behalf of State Government for molasses sold, duty or impost in the nature of 
tax and as such includible or not includible in the value of molasses-Held: 
Administrative charges levied, is in addition to and separate from the statutory 
price of molasses fixed wider section 10 of UP. Act, which is the normal price 
D under section 4(/)(a) of 1944 Act-It never formed part of normal price as 
such cannot come within the ambit of assessable value-Further applying 
various tests levy of administrative charge is i!J nature of tax and n<;it fee-
Hence, not includible in the assessable value in terms of section 4(/)(a). 
Respondent-assessee is engaged in the manufacture and clearance of 
E molasses falling under tariff item No. 1703.10. It collected administrative 
charges in terms of section 8(5) of U.P. Sheera Niyantran Adhiniyam, 1964 
on behalf of the State Government from the buyers/alottees, on the molasses 
sold. Respondent did not include administrative charges collected from the 
buyer in the assessable value of molasses for purpose of levy of excise duty 
F and was issued notices. Assistant Commissioner held that the administrative 
charges were in. nature of re.es and as such includible in the value of molasses 
in terms of section 4(4)(d)(ii) of Central Excise Act, 1944. Commissioner 
G 
(Appeals) set aside the order. However, tribunal dismissed the appeal filed 
holding that the administrative charge was a tax and was not includible in 
the value of molasses. Hence the present appeal. 
Division Bench of this Court doubted the correctness of two-judge Bench 
decision of this Court .in the case of Commissioner of Central Excise, Meerut v. 
Kisan Sahkari Chinni Mills Ltd, that administrative charges collected by the 
sugar factory for molasses sold from the buyers constituted an impost in the 
nature of tax and as such was not includible in the value of molasses in terms 
H 
790 
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C.C.E. v. CHHAT A SUGAR CO. LTD. 
791 
of section 4(4)(d)(ii) of the Act, and referred the matter to the present Bench. A 
Appellant-Revenue contended that the words 'other taxes' in section 
4(4)(d)(ii) of the Act cannot be interpreted in the light of the words "taxation" 
as defined in Article 366(28) of the Constitution; that the U.P. Act is a 
regulatory legislation and the administrative charges l~vied thereunder are 
in the nature of regulatory fees; that regulatory regime for molasses was B 
required in the public interest in view of the potential danger to public health 
and environment if the industry and the product are not properly regulated; 
that the mere fact that the charges may be recovered under section 8(5) of 
the U.P. Act by the sugar factory (producer) from the buyer of molasses does 
not militate against the administrative charges being in the nature of C 
regulatory fees, nor lead to the"Conclusion that it is a tax, since the benefit of 
the regulation of molasses goe~ to the buyer, the administrative charges may 
be recovered from him; that the levy under the U.P. Act is a regulatory fee 
and not a tax and therefore, is includible in the assessable value for the purpose 
of imposition of excise duty; and that Kiran Sahkari Chinni Mills Ltd case is 
erroneous. 
Dismissing the appeals, the Court 
HELD: Per Kapadia, J. (For himself and Khare, CJI) : 
D 
1.1. In the instant case, one is concerned with the provisions of the E 
Central Excise Act, 1944 as it stood at the relevant time. Taxes are one of the 
items of deduction from the normal price, which is the price at which excisable 
goods are ordinarily sold by the assessee to the buyer in course of wholesale 
trade, to arrive at the assessable value. A normal price under section 4(1)(a) 
of the Act includes numerous cost factors including taxes and therefore, under 
section 4(4)(d){ii) the legislature has provided for express deduction of taxes F 
from the normal price to arrive at the assessable value. However, the normal 
price may vary. Under the second proviso to section 4(1)(a), the normal price 
is the 

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