DUGAR ELECTRONICS versus COLLECTOR OF CENTRAL EXCISE, CALCUTTA

Citation: [2002] SUPP. 4 S.C.R. 309 · Decided: 21-11-2002 · Supreme Court of India · Bench: S.S.M. QUADRI, ARIJIT PASAYAT · Disposal: Disposed off

Judgment (excerpt)

• 
DUGAR ELECTRONICS 
A 
v. 
COLLECTOR OF CENTRAL EXCISE, CALCUTTA 
NOVEMBER 21, 2002 
[SYED SHAH MOHAMMED QUADRI AND ARIJIT PASAYAT, JJ.] 
B 
Central Excise and Salt Act, 1944 : 
S.s. 4(1) (a) and (b)-Excisable goods-Valuation of-For purposes of 
charging excise duty-Tape recorders manufactured by assessee-Moulds and C 
other parts got prepared by 'P' at its cost from third parties and supplied to 
assessee free of cost-Price of tape recorders declared by assessee not accepted 
by Revenue-Tribunal opined that price declared by assessee was not 'full 
commercial value '-It fixed the price of goods at the rate at which ''P'' sold 
the sa1ne to its dealers and re1nitted the case to adjudicating authority as in D 
its ~pinion assessee was entitled to certain deductions which were not allowed-
Held, the price fixed by the Tribunal cannot be sustained-Since the assessee 
itself has stated that provisions of s.4(J)(a) are not applicable, price has to be 
fixed under s.4(J)(b) in accordance with Central Excise (Valuation) Rules-
Tribunal has not fu:ed the price under any of the Rules-Assessing authority 
would determine the price accordingly u/s.4(1)(b) read with the Rules E 
considering the question of perniissib/e deductions as per directions of the 
Tribunal-Central Excise (Valuation) Rules, 1975. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 9918 of 
1995. 
From the Judgment and Order dated 31.1. I 994 of the Central Excise 
Customs and Gold (Control) Appellate Tribunal, New Delhi in A. No. E/ 
3699/88-A in F.O. No. 38 of 1994-A. 
F 
Vikram Nankani, Ms.Vanita Bhargava, Ms.Bina Gupta and Ms. Divya G 
Roy, for the Appellant. 
A.K. Ganguli, Raj iv Nanda and B. Krishna Prasad, for the Respondent. 
The following Order of the Court was delivered : 
309 
H 
310 
SUPREME COURT REPORTS [2002] SUPP. 4 S.C.R. 
A 
The assessee is in appeal against the order of the Customs, Excise and 
Gold (Control) Appellate Tribunal, No.38/94-A, dated January 31, 1994. 
The assessee is the manufacturer of tape recorders in the brand name 
of 'Philips'. Moulds and some other parts of the tape recorders were got 
prepared by Pieco (Philips) at its costs from third parties and supplied free 
B of costs to the assessee. The assessee declared the price of tape recorders 
which was not accepted as correct assessable value of goods by the Excise 
authorities as well as the Tribunal. The Tribunal found that the price declared 
by the assessee was not full commercial value because the moulds etc. which 
were got produced by Pieco and were supplied fr~e to the assessee resulted 
C in an element of consideration passing from Pieco to the assessee. The Tribunal 
noticed that the assessee was entitled to certain deductions which were not 
allowed to it, and, for that purpose, it remanded the case to the adjudicating 
authority. Having so done, the Tribunal fixed the price of the goods at the 
rate at which Pieco (Philips) sold it to its dealers. Aggrieved by these two 
findings of the Tribunal, the assessee has come up in appeal to this Court. 
D 
Mr. Vikram Nankani, the learned counsel appearing for the appellant, 
contends that the rejection of the price declared by the appellant is illegal and 
unsustainable. We are afraid we cannot accept the contention of the learned 
counsel for the simple reason that it is not disputed that for the development 
of moulds, Pieco played a dominant role. The assessee did not invest for the 
E development of the moulds. The cost was incurred by Pieco. The assessee got 
them free from Pieco. These facts do support the finding of the Tribunal that 
the transaction does not represent 'full commercial value'. 
Learned counsel further contends that fixation of assessable value by 
F the Tribunal at the rate at which Pieco sold the goods to its dealers, is not 
justified. Having heard Mr. Ganguli,. learned senior counsel for the respondent, 
we are of the vi~w that the complaint made by the appellant is justified. No 
provision is brought to our notice under which the price charged by the buyer 
to its dealer_ can be taken, ipso facto, as assessable value under Section 4 of 
the Central Excise & Salt Act, I 944 and/or the Rules made thereunder. The 
G assessable value has to be fixed under Section 4 of the Act and the Rules, 
which may be more or less or the same as fixed by the Tribunal . Section 4, 
insofar as it is relevant for the purposes, reads as follows: 
"Section 4. Valuation of excisable goods for purposes of chargi

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