M/S. SONY INDIA LTD. versus COMMISSIONER OF CENTRAL EXCISE, DELHI

Citation: [2004] SUPP. 2 S.C.R. 127 · Decided: 05-05-2004 · Supreme Court of India · Bench: S. RAJENDRA BABU · Disposal: Dismissed

Judgment (excerpt)

MIS. SONY INDIA LTD. 
A 
v. 
COMMISSIONER OF CENTRAL EXCISE, DELHI 
MAY 5, 2004 
B 
[S. RAJENDRA BABU, CJ. AND G.P. MATHUR, J.] 
Central Excise Act, 1944-Section 4A(2), I I-AB and I I-AC-Levy of 
duty-On Colour Television-Whether to be on ad valorem basis or at 
specific rate-By notification duty at specific rate introduced where the 
manufacturer did not print the retail price on the package or such retail C 
sale price was not the price as contemplated in the explanation or where 
the retail sale price was not the sole consideration-Clearance of goods 
by manufacturer from factory gate and sale price affixed at their depots 
and gifts offered-Levy on ad valorem basis @ 18% and penalty and 
interest imposed as having violated Weights and Measures Act- D 
Confirmation of levy by CEGAT-On appeal, held: Duty liable to be levied 
at ad valorem basis @ I 8'Yo--Manufacturer had removed the goods from 
factory for the purpose of getting over the payment of higher duty--
Notwithstanding free gifts, sale price would not cease to be the sole 
consideration-Standards of Weights and Measures Act, 1976---Standards E 
of Weights and Measures (Packaged Commodities) Rules, 1977. 
Appellants, manufacturers of Colour Television were required to 
pay excise du_ty on the product at the rate of 18% ad valorem. On 
2.6.1998 Notification was issued indicating that where manufacturer F 
did not print the retail price on the package of Colour TV receivers 
or where the retail .sale price either did not include the elements 
required to be included by_ J;:xplanation of the Notification or where 
the retail sale price was not the sole consideration for the sale, in such 
cases specific rate of duty was leviable depending on the size of the 
screen of the Television. 
G 
Excise authority raised demand of duty on all the models of 
Colour Television manufactured by the appellant on ad valorem basis 
@ 18% and imposed penalty u/s. 11-AC and interest u/s. 11-AB. Excise 
authority found that goods had been removed from the place of H 
127 
128 
SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R. 
A manufacture without printing the retail sale price as it was mandatory 
for them to print the price once the goods are cleared in packed 
condition as per requirement of Standards of Weights and Measures 
Act, 1976. Plea of appellant was that the transfer was only a stock 
transfer from factory to depots and the retail price were printed at 
B depots; that stock transfer was not sale of goods as the sale took place 
from their depots, and that the printed retail price was not the sole 
consideration as they had launched an exchange scheme. Hence duty 
was not leviable at ad valorem basis @ 18%. Excise authority rejected 
.the plea and confirmed the duty. On appeal, Customs, Excise and Gold 
C (Control) Appellate Tribunal (CEGAT) upheld the order of authority 
holding that notwithstanding free gifts, the sale price charged from the 
buyers will not cease to be sole consideration and that it was mandatory 
to print the maximum retail price on the package at the time of 
clearance from the factory; that extended period of demand of duty 
and the peaal provision u/s. 11-AB and 11-AC have been rightly 
D invoked; that appellant could not have been said to be under bonafide 
belief that their case was not covered by the expression "the retail 
sale price being the sole consideration for such sale" as appellant 
postponed the printing of maximum retail price before clearance from 
the factory premises to the depots intentionally to avoid payment of 
E duty at the appropriate rate applicable to their goods. Hence the 
present appeal. 
Dismissing the appeal, the Court 
F indicating the price thereof but affixed the price in their depots. 
HELD : 1. Appellant had cleared the goods from factory without 
Therefore, it is clear that the whole object of removing the goods from 
their factory premises to their depots was with the purpose of getting 
over the payment of higher duty. Though the goods were marketed 
form the depots of the appellant it is clear that the same was done after 
G affixing the price and that become the sale price of the goods in 
question. Notwithstanding the free gifts offered by the appellant to the 
buyers on the sale of television sets, the sale price charged from the 
buyers will not cease to be the sole consideration for such sale. The 
offer of gifts was only incidental benefits and not the part of the 
H consideration to be paid in regard to t

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