M/S D.J. MALPANI versus COMMISSIONER OF CENTRAL EXCISE, NASHIK

Citation: [2019] 6 S.C.R. 925 · Decided: 09-04-2019 · Supreme Court of India · Bench: S.A. BOBDE · Disposal: Appeal(s) allowed

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

Judgment (excerpt)

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M/S D.J. MALPANI
v.
COMMISSIONER OF CENTRAL EXCISE, NASHIK
(Civil Appeal No. 5282 of 2005)
APRIL 09, 2019
 [S. A. BOBDE,  DEEPAK GUPTA AND VINEET SARAN, JJ.]
Central Excise Act, 1944: s.4 – Assessable value – Dharmada,
a charitable donation – Inclusion of, in the assessable value – Held:
When an amount is paid as Dharmada along with the sale price of
goods, such payment is not made in consideration of the transfer of
goods – Such payment is meant for charity and is received and held
in trust by the seller – If such amounts are meant to be credited to
charity and do not form part of the income of the assessee, they
cannot be included in the transaction value or assessable value of
the goods – In the instant case, the Dharmada collected by the
appellant was an optional payment made by the buyer – Therefore,
it cannot be regarded as part of the transaction value for the sale
of goods – Sale of Goods Act, 1930 – Central Excise Valuation
(Determination of Price and Excisable Goods), Rules 2000 – r.6.
Allowing the appeal, the Court
HELD: 1.1 There is no dispute that though paid along with
the sale price, the payment for Dharmada was made voluntarily
by the purchasers and that upon receipt was made over to charity.
There were certificates by the chartered accountant that showed
that the Dharmada collection was credited to a separate account
and donated to a trust during the period of the show cause notices.
[Para 9][930-E]
1.2  Sale and purchase have been defined by Section 2 (h)
to mean any transfer of the possession of goods for payment or
other valuable consideration. A contract of sale under the Sale of
Goods Act, 1930 means a contract whereby the seller transfers
or agrees to transfer the property in goods to the buyer for a
price. The transaction in this case was the sale of chewing tobacco.
[Para 12][931-C]
[2019] 6 S.C.R. 925
  925
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SUPREME COURT REPORTS
[2019] 6 S.C.R.
2.1 Under the Act, excise duty is chargeable with reference
to their value on removal of the goods.  In case of sale of goods
where price is the sole consideration for the sale, duty is charged
on the transaction value. Additional consideration, if any, is also
included in the duty payable on such goods vide explanation.
“Transaction value” is defined in Section 4(3)(d) of the Act to
mean “the price actually paid or payable for the goods, when sold,
and includes in addition to the amount charged as price, any
amount that the buyer is liable to pay to, or on behalf of the
assessee by reason of or in connection with the sale……., but
does not include the amount of duty of excise, sales tax and other
taxes, if any, actually paid or actually payable on such goods”.
[Para 13][931-D; 932-A-B]
2.2 In case of a sale of goods, excise duty is chargeable
where price is the sole consideration of a sale on ‘Transaction
value’. `Transaction value’ means the price actually paid or
payable for the goods and any additional amount the buyer is liable
to pay to the assessee or anyone on his behalf in connection with
the sale by Section 4(3)(d). Rule 6 of the Central Excise Valuation
(Determination of Price and Excisable Goods), Rules 2000
provides that in case of a sale, the value of such goods shall be
deemed to be the transaction value and the amount of money
value of any considerations following directly or indirectly from
the buyer to the assessee.   Thus, duty is chargeable on the “price
actually paid for the goods”, in other words, the price paid as
consideration for transfer of property in the goods. The test for
determining whether in a transaction of sale any amount has been
paid as price so that it can be treated as transaction value is only
whether, the money was paid for the goods as consideration or
the money value on any additional consideration paid in connection
with the sale of goods.  No amount not paid as consideration for
the goods can go to make transaction value. [Para 14][932-C-D;
933-A-B]
Garner’s Dictionary of Legal Usage, 3rd Edition –
referred to.
2.3   The term valuable consideration refers to an act,
forbearance or promise having an economic value. In the instant
case, it is clear that only the money paid for the promise of
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transferring goods was the valuable consideration contemplated
by the Excise Act and the Rules. The transaction value was the
sale of goods and the consideration was the price or value paid
for the goods. The transaction value must be construed
accordingly. This f

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