LexDELHI CLOTH & GENERAL MILLS CO. LTD. versus UNION OF INDIA & ORS.
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A B c D E F G H 440 DEUII CLO'lll & GENERAL MILLS CO. LTD. v. UNION OF INDIA & ORS. MARCH 4, 1986 [E.S. VENKATARAMIAH & M.P. THAKKAR, JJ.] Central Excise & Salt Act, 1944, s.4 - Excise Duty - / Wholesale Cost price forming basis of assessment - Determina- t i.on of - Maximum price of commodity fixed statutorily under Control Order - Whether conclusive. During the period between May 4, 1971 and July 22, 1971 owing to the depression in the market, the appellant had to sell on wholesale basis its vegetable products known as "Panghat" and "Roshni" brands at Rs. 78.66 and Rs. 71.62 per tin in order to clear the accumulated stock and to avoid huge loss. These prices were lower than the maximum· prices prescribed by the Notification issued under the Vegetable Oil ~ Products Central Order, 1947. The · appellant submitted a price list containing the aforesaid wholesale cash price in respect of these two products to the Superintendent, Central Excise, Delhi as required by rule 173-C of the Central Excise 'Rules, 1974 and sought his approval therefor. The Superintendent, Central Excise rejected the prayer of the appellant and directed that the central excise duty under s.4 of the Central Excise & Salt• Act, 1944 was payable on the basis of the maximum prices fixed ~ under the above Notification. The appellant's appeal before the Deputy Collector (Technical), Central Excise also failed. Aggrieved by the decision of the Deputy Collector (Technical), the appellant filed a writ petition before the High Court on ·the ground that the maxinllm price fil<ed by the Government of India should not be taken as the basis for levying excise duty under the Act when the appellant had to sell the goods in question at a lower rate owing to bona fiM·-•. comnercial reasons. The High Court dismissed the petition in limine. - -< DELHI CLOTH MILLS v. U.O.I. 441 A Allowing the appeal, HELD : 1. The Order of the High Court and the orders passed by the Central Excise Authorities are set"aside and the case is remanded to the Superintendent of Central Excise to redetermine the wholesale cash price in respect of the goods B in question on the basis of the relevant principles. [447 A-Bl 2.1 Section 4 of the Central Excise & Salt Act 1944 does not refer to any notification issued under the Essential Commodities Act, 1955 fixing the maximum price of any essential commodity. Hence the maximum price fixed thereunder cannot control the determination of the value of the goods C under s.4 of the Act for the purpose of levy of excise duty. In appropriate cases the assessing authorities may while determining the wholesale cash price under section 4 of the Act take into consideration the maximum price fixed under the Essential ColllllOdities Act, 1955 to decide whether the goods "' are sold by a dealer bona fide at the prices quoted by him. It D cannot, however, be conclusive. [446 B-D] 2. 2 The provisions contained in s. 4 of the Act are intended for the purpose of determining the excise duty payable by a manufacturer. They are intended for ascertaining the wholesale cash price realised or realisable by the manufacturer in respect of the goods in question. Such price should ordinarily be fixed at arms length and in the usual course of business. It should be fixed bona fide without showing any kind of favour to the buyer. [445 F-G_] _ E In the instant case, the excise authorities have not F made any attempt to determine the whole-sale cash price of the goods in question in accordance with law. It appears that both the authorities felt that they were bound by the max!nn111 prices notified by the Government of India and the excise duty was payable on that basis of the wholesale prices fetched by the goods even if they were lower than the controlled prices. G }-, They have not given any valid reason for rejecting the price list submitted by the appellant. [446 G-H] 3. The purpose of fixing the maximum price beyond which essential commodities cannot be sold is different from the purpose of the provisions contained in s.4 of the Act. Under H · A B c D E F G H 442 SUPREME COURT REPORTS [1986) 1 S.C.R •. the provisions of the Essential Conmodities Act 1955 and the various orders and notifications issued thereunder when a maximum price of an essential conmodity is fixed, a dealer ia prohibited from selling the collllllOdity beyond that price. The said restriction is
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