ESCORTS LTD. versus COMMISSIONER OF CENTRAL EXCISE, DELHI-II

Citation: [2004] SUPP. 5 S.C.R. 603 · Decided: 25-10-2004 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Appeal(s) allowed

Judgment (excerpt)

-
ESCORTS LTD. 
v. 
COMMISSIONER OF CENTRAL EXCISE, DELHI-II 
OCTOBER 25, 2004 
[ ARIJIT PASAYA T AND C.K. THAKKER, JJ.] 
Central Excise and Salt Act, 1944-Section 4(1)-Central Excise Rules 
1944-Central Excise Valuation Rules, 1975-Rule 6(b)-Show cause notice 
A 
B 
to assessee for· contravention of provisions of 1944 Rules read with section C 
4(1) and demand made referring to Rule 6(b)-Remittance of matter to the 
tribunal-Tribunal applying Ashok Leyland's case in holding the case of 
assessee that price ascertainable by way of direct sales, as such section 4(1) 
does not apply and dismissing assessee 's appeal-On appeal, held: With 
regard to the demand made, department's case rested on Rule 6-Tribunal 
did not consider the applicability of Ashok Leyland's case in the background D 
of Rule 6 though it has substantial bearing on the dispute-As such th,e 
matter remitted to the tribunal for considering the factual aspect and 
applicability of Ashok Leyland's case to the facts of the instant case. 
Constitution of India, 1950-Artic/e 141-Precedents-Reliance on-
Principles to be taken care of-Held: Courts should place reliance on E 
decisions after discussing as to how the factual situation fits in with the facts 
situation of the decision on which reliance is placed-Observations of Courts 
cannot be read as Euclid's theorems or provisions of the statute but in the 
context in which they appear to have been stated-While interpreting words, 
phrases and provisions of a statute, judges may embark into lengthy F 
discussions which is meant to explain and not to define-Further the judges 
do not interpret judgments since the judgments are not to be construed as 
statutes-Also the words of statutes are to be interpreted, their words are not 
to be interpreted as statutes-Interpretation of Statutes. 
Appellant was issued show cause notice for contravention of various G 
provisions of Central Excise Rules, 1944 read with section 4(1) of Central 
Excise and Salt Act, 1944 and demand was made referring to Rule 6(b) of 
Central Excise Valuation Rules, 1975. Both Collector of Central Excise and 
tribunal confirmed the demand. However, this Court remitted the matter to be 
heard afresh. 
603 
H 
604 
SUPREME COURT REPORTS [2004] SUPP. 5 S.C.R. 
A 
98% of the goods were capitvely consumed by assessee and there was 
2% direct sale in the spare market. For ascertaining the value of goods 
captively consumed by assessee, tribunal applied the decision of Ashok 
Leyland's case that when price is ascertainable by way of direct sale, section 
4(1 )(b) would not apply, and as such the valuation of goods captively consumed 
B is to be based on market price of goods directly sold, and dismissed the appeals .. 
filed by the assessee. Hence the present appeal. 
Appellant-assessee contended that the tribunal was wrong in applying 
the principles laid down in Ashok Leyla1:1d's case as the judgment in that case 
can be applicable only in a situation where the goods sold in the spare parts 
,€ market are identical and complete in all respects to the goods captively 
consumed and in the instant case, the goods captively consumed are different 
and not identical to the goods sold in the spare parts market; and that the 
department based its case on Rule 6 which has application only when prices 
are unascertainable. 
D 
Respondent-department contended that the assessee did not bring out 
E 
any factual difference so far as the instant case is concerned vis-a-vis what 
was decided in Ashok Leyland's case as such the order of the tribunal does 
not warrant any interference. 
Allowing the appeals, the Court 
HELD: 1. Courts should not place reliance on decisions without 
discussing as to how the factual situation fits in with the facts situation of 
the decision on which reliance is placed. Disposal of cases by blindly placing • 
reliance on a decision is not proper. Circumstantial flexibility, one additional 
or different fact may make a world of difference between conclusions in two 
F cases. Observations of Courts are neither to be read as Euclid's theorems 
nor as provisions of the statute and that too taken out of their context These 
observations must be read in the context in which they appear to have been 
stated. Judgments of Courts are not to be construed as statutes. To interpret 
words, phrases and provisions of a statute, it may become necessary for judges 
G to embark into lengthy discussions but the discussion is meant to explain 
and n

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