COMMISSIONER OF CENTRAL EXCISE, MUMBAI versus M/S. FIAT INDIA (P) LTD. & ANR.

Citation: [2012] 12 S.C.R. 975 · Decided: 29-08-2012 · Supreme Court of India · Bench: H.L. DATTU · Disposal: Appeal(s) allowed

Cited by 3 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2012] 12 S.C.R. 975 
COMMISSIONER OF CENTRAL EXCISE, MUMBAI 
v. 
MIS. FIAT INDIA (P) LTD. & ANR. 
(Civil Appeal Nos. 1648-1649 of 2004) 
AUGUST 29, 2012 
[H.L. DATTU AND ANIL R. DAVE, JJ.] 
Central Excise Act, 1944 - ss. 4(1)(a) and 4(1)(b) -
Applicability - Assessee declaring wholesale price in terms 
A 
B 
of s. 4(1)(a) of the cars manufactured by them - Revenue C 
determining the value of the goods as per s. 4(1)(b) rlw. 
Valuation Rules - Notice issued by Revenue to assessee 
alleging short levy and demanding differential duty - The 
adjudicating authority as well as the appellate authority 
confirming the show cause-cum-demand notice - Appellate D 
Tribunal allowing the appeal of the assessee - On appeal, 
held: The fundamental criterion for computing the value of an 
excisable article is the normal price at which the excisable 
article is ordinarily sold by the manufacturer, where the buyer 
is not a related person and the price is the sole consideration E 
- If there is anything to suggest to doubt the normal price, 
recourse to s. 4(1)(b) could be made - In the present case, 
the assessee sold its goods at a lower price than the 
manufacturing cost and profit to penetrate the market - This 
would constitute extra-commercial consideration - Thus price F 
is not the sole consideration - Therefore assessing authority 
was justified in invoking clause (b) of s. 4(1)- Since s. 4(1)(b) 
is applicable, valuation is required to be done on the basis 
of 1975 Valuation Rules prior to 1.7.2000 and thereafter in 
accordance with 2000 Valuation Rules - The court cannot G 
take exception of the assessable value of the excisable goods 
quantified by the assessing authority - Central Excise 
(Valuation) Rules 1975 -
Central Excise Valuation 
(Determination of Price of Excisable Goods) Rules, 2000. 
975 
H 
976 
SUPREME COURT REPORTS 
[2012] 12 S.C.R. 
A 
Interpretation of Statutes - Legislative intent - Whenever 
legislature uses certain terms of well-known legal significance 
or connotations, courts to interpret them as used or 
understood in popular sense, if not defined under the Act or 
the Rules framed thereunder -
The normal rule of 
B interpretation is that words used by legislature are generally 
a safe guide to its intention - Where statute's meaning is clear 
and explicit, words cannot be interpolated. 
Precedent - A case is only an authority for what it actually 
decides and not for what may seem to follow logically from it. 
c 
Words and Phrases: 
'Value', 'Normal Price', 'Ordinarily Sold' and 'Sole 
Consideration' - Meaning of, in the context of s. 4(1)(a) of 
0 
Central Excise Act. 
'Transaction value' - Meaning of, in the context of Central 
Excise Act. 
'Popular sense' - Meaning of, in the context of 
E Interpretation of Statutes. 
The respondents-assessee were the manufacturers 
of motor cars i.e. Fiat Uno-model. The assessees have 
filed several price declarations, declaring wholesale price 
F of their cars for sale through wholesale depots during the 
period 27 .5.1996 to 4.3.2001. The revenue issued 11 
show-cause notices for the period from June 1996 to 
February 2000, alleging that the assessee had not paid 
the correct duty on the cars, and demanded differential 
duty on the assessable value determined as per s. 4(1)(b) 
G of Central Excise Act, 1944 rlw. (Valuation) Rules. The 
assessee replied that they had declared the assessable 
value or normal price in terms of s. 4(1)(a) of Central 
Excise Act, 1944 and determination of the assessable 
value as per s. 4(1)(b) r/w. the Valuation rules, 1975 would 
H not arise; that when normal price is available, the 
COMMISSIONER OF CENTRAL EXCISE, MUMBAI v. 977 
. 
FIAT INDIA (P) LTD. & ANR. 
recourse to any other method of valuation is incorrect and A 
improper; that due to competition in the market, they kept 
the price of the cars low and were forced to sell their cars 
at a loss; and that the assessable value declared by them 
should be accepted even if it is below manufacturing cost 
and thus there is no short levy or short payment of duty. B 
The Adjudicating Authority confirmed the show 
cause-cum-demand notices holding that the cost of the 
production of the car was much higher than the price at 
which it was sold in the market; that the price was 
artificial to capture the market and therefore the price at C 
which they were sold cannot be said to be 'normal price' 
as per Section 4 of the Act; and that when normal price 
cannot be ascertained as per 

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