LexM?S. PAWAN BISCUITS CO. PVT. LTD. versus COLLECTOR OF CENTRAL EXCISE, PATNA
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A MIS. PA WAN BISCUITS CO. PVT. LTD. . v. COLLECTOR OF"CENTRAL EXCISE, PATNA JULY 20, 2000 B [B.N. KIRPAL AND D.P. MOHAPATRA, JJ.] Central Excises & Salt Act, I 944: Section 4. c Central Excise (Valuation) Rules, 1975. Excise duty-Computation of-Assessee Company-Manufacturing biscuit under agreement for Britania Company-Assessable value of biscuits- Held, would include cost of raw material supplied by latter company in addition to assess~e company's manufacturing costs and profits but profit of D latter company or expenses incurred after the manufacture of the biscuits by the assessee company-Not includible. The appellant-company established a unit for manufacture of biscuits. It entered into an agreement with Britannia Industries Ltd. The terms of the agreement provided that (1) the ingredients for the manufacture of biscuits E as well as the recipe or method by which the biscuits were to be manufactured were to be supplied by Britannia; (2) the ingredients so supplied were to be regarded as belonging to Britannia for the manufacture of the biscuits; (3) the appellant was requin!d to make packages as directed by Britannia and then supply the same under Britannia's instructions; (4) for the work done, the appellant was entitled to receive certain amount which was to be fixed from F time to time; (5) relationship between the parties shall always be that of principal and principal and not principal and agent (6) the appellant shall be entitled to continue to manufacture biscuits under other brands and to sell the same. The Assistant Collector of Excise calculated the excise value of the G biscuits manufactured by the appellant - company on the basis of Britannia's wholesale cash price. The Collector (Appeals) affirmed the order of the Assistant Collector. The Tribunal held that the appellant was an agent of Britannia and therefore it was the Britannia's wholesale price which should be taken into consideration for arriving at the normal value for the purposes H of computing excise duty of the biscuits manufactured by the appellant. Hence 628 .........., PAW AN BISCUITS CO. PVf. LTD. v. COLLECTOR OF CENTRAL EXCISE (KIRPAL, J.] 629 this appeal by the assessee. Allowing the appeal, this Court HELD: It is settled law that for the purpose of ascertaining assessable value post-manufacturing expenses have not to be taken into consideration. A In the present case the raw material for the manufacture of biscuits is given B to the appellant by the Britania industries. After the biscuits are made. they are given back to or are delivered under the instructions of Britannia. The appellant was entitled to receive processing charges which would include its expenses plus profits for the purposes of determining the excise value. However, the cost of the raw material supplied by Britannia will have to be C included in addition to the appellant's manufacturing costs and profit. What cannot be included is only profit of Britannia or expenses which are incurred after the manufacture of the biscuits by the appellant. Consequently, the excise authorities will be at liberty to determine the amount of excise duty afresh in accordance with law. (631-C; 632-G; 633-AI Mis. Ujagar Prints & Ors. (II) v. Union of India & Ors., ( 1989) 3 SCC 488 and Ujagar Prints & Ors. (II) v. Union of India & Ors., (1989) 3 SCC 531, relied on. CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1819of1991. From the Judgment and Order dated 8.1. 91 of the Customs Excise, and Gold (Control) Appellate Tribunal, New Delhi in Fl A. No. 2523/89-A in 0. No. 16191-A D E Anil B. Divan, R.N. Das, T.L.V. Iyer, Ravinder Narain, Ashok Sagar, Janesh Baweja, fyfs. Sonu Bhatnagar, Dilip Tandon, R.N. Verma and P. F Parmeswaran for the appearing parties. The Judgment of the Court was delivered by KIRP AL, J. The appellant who is manufacturing biscuits is seeking to impugn the assessable value of the biscuits manufactured by it for MIS. G Britannia Industries Ltd. (hereinafter referred to as 'Britannia') pursuant to an agreement which had been entered into between the two Companies. It is not in dispute that the appellant was incorporated on 30.12.1982 and after making arrangements for obtaining finance it started a Unit from 3.1.1985 wherein it commenced commercial production of its own brand of H 630 SUPREME COURT REPORTS [2000) SUPP. I S.C.R. A bisc11its. On 15.12.1986, an agreement was entered into between the
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