LexM/S. H.B.L. AIRCRAFT BATTERIES LTD. versus COMMISSIONER OF CENTRAL EXCISE, HYDERABAD
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
A
MIS. H.B.L. AIRCRAFT BATTERIES LTD.
v.
COMMISSIONER OF CENTRAL EXCISE, HYDERABAD
MAY 5, 2004
B
[RA.IENDRA BABU, CJ. AND G.P. MA THUR, J.]
Central Excises and Salt Act. 1944/Central Excise (Valuation) Rules,
1975-Section 4 /Rules 4, 5 and 6{bj(iil-Assessable value of goods-
Determination of-Goods supplied to one of rhe consumers at lower price
C ascerrained under a contract-Revenue derermined rhe assessable value on
the basis ofmarket price taking into account comparable value~'orrectness
of-Held : Value should be on the basis of con1rac1 price and not the
market value-Determination on the basis of comparable value to arise
only when the value is undeterminable.
D
Appellant-assessee was manufa;turing Silver Oxide Zinc Batteries,
in which silver was used as raw material. It used to supply the batteries
to Ministry of Defence at a lower price and to Hindustan Aeronautics
Ltd. (HAL) at a higher price. The lower price was as a result of
E contract entered into between the Ministry and the appellant, wherein
it was stipulated that the Ministry would be supplying silver to the
appellants. Ministry used to supply the silver after obtaining the same
from its mints at the rate ol Rs. 2,500 per kg. After depletion of the
stocks from the mints, it supplied old batteries to recover silver from
F them. Appellants while invoicing goods to the Ministry, took the value
of the silver recovered from the old batteries at Rs. 2,500 per kg. as
against the market rate of silver.
Revenue, after noticing the difference in the price of the batteries
supplied to Defence Ministry and to HAL, demanded differential duty
G on batteries supplied to Ministry, on the ground that the market value
of silver should be taken as the basis for determining the assessable
value. After confirmation of demand appellate authority held that in
the present case price based on comparable goods was to be adopted
as the price of silver,· since according to Section 4 of Central Excise and
H Salt Act, 1944, the price that is to form the basis of assessment is the
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H.B.L. AIRCRAFT BATTERIES LTD. v. C.C.E.
95
.,.
price at which the goods are sold in the ordinary course of business, A
it is not attracted, because the sale to the Ministry was not a transaction
in the ordinary course of business; it was a special arrangement and
a national price of silver was adopted.
In appeal to this Court, appellant contended that assessable value B
of silver has to be determined on the contract price; that in view of
proviso to Section 4(l)(a) the price at which the goods are sold to each
buyer shall be taken as normal price, and therefore the price at which
the batteries were sold to Ministry would be taken as normal price;
that comparable value under Rule 6(a)(ii) could be taken into account c
when the value of the goods cannot be ascertained under Rule 4 or Rule
5 of Central Excise (Valuation) Rules, 1975.
Revenue contended that the market price and not the contract
price should be taken into account; that since retrieving silver from D
•
old batteries is a special arrangement and not a 'normal practice',
appellant cannot get the benefit of proviso to Section 4(l)(a).
Allowing the appeal, the Court
HELD: I. Section 4 of the Central Excises and Salt Act deals with E
valuation of excisable goods which are chargeable to duty with
reference to the value. Valuation is based ordinarily on the price
- .-
thereof that is at the price at which goods subjected to ex~ise duty are
sold by manufacturer to a buyer. In exceptional circumstances when
the valuation cannot be so more that closest equivalent thereof is F
determined in the manner prescribed in the valuation Rule. 'Value' for
the purpose of the said Rules is value under Section 4 of the Act and
is to be determined under Rules 4 and 5. Rule 6 has to be invoked only
in situation when assessment of value of goods subject to excise duty
cannot be determined under Rules 4 and 5. When the goods are not G
sold by the manufacturer but are used or consumed in the manufacture
of other goods, the value is to be determined upon the value of
comparable goods manufactured, and if that canaot be done on the
f
cost of production, if any, which he would have normally earned as the
sale of such goods. [99-E-G[
H
96
SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.
A
Ashok Leylandv. CCEMadras, (2002) 146 ELT 503; Union Carbide
(India) v. CCE Calcutta, (2003) 153 ELT 15, BurExcerpt shown. Read the full judgment & AI analysis in Lexace.