MYSORE ROLLING MILLS (P) LTD. versus COLLECTOR OF CENTRAL EXCISE, BELGAUM

Citation: [1987] 2 S.C.R. 318 · Decided: 18-02-1987 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Dismissed

Judgment (excerpt)

A 
MYSORE ROLLING MILLS (P) LTD. 
v. 
COLLECTOR OF CENTRAL EXCISE, BELGAUM 
FEBRUARY 18, 1987 
~ 
B 
[R.S. PATHAK, CJ AND RANGANATH MISRA, J.] 
Central Excise and Salt Act 1944/Central Excise Rules, 1944--
Sections 4, JJA & 35L/Rules 6, 9 & JO-Excise duty-Handling 
~-
charges to be added for computation of duty-Manufacturer suppres-
sing disclosure of handling charges-What is period of limitation 
c 
applicable. 
,..., 
Between September 1974 and May 1977 the appellant received 
more than 6 lakh rupees from its customers by issue of debit notes over 
and above the amounts received under regular invoices for manufactur-
}-
D 
in~ aluminium wire rods on job basis on their behalf. 
The Excise Authorities issued notice under Rule lO(i)(c) of the 
Central Excise Rules, Jl944, to the appellant to show cause why the 
aforesaid amount called as "handling charges" should not be added to 
the invoice price and differential duty recovered. The Assistant Col-
E 
lector confirmed the demand after cause was shown which was upheld 
by the Appellate Collector and confirmed by the Tribunal. 
>t 
In the appeal to this Court, on behalf of the appellant it was 
contended; (I) that on the basis of Rule 6(b)(i) of the Valuation Rules 
the statutory levy price of aluminium should be adopted as being the 
F 
price of comparable g'"Jds and with effect from 1.10.75 the assessable 
value should have been fixed under proviso (ii) to s.4(1)(a) or s.4(l)(b) 
~ 
at the same amount, (2) that Rs.60 which was collected as handling 
charges was not to be taken into account for computing duty and (3) + 
that the notice was barred by limitation. 
G 
Dismissing the appeal, 
HELD: (1) With effect from 1.10.1975 a new s.4 has been in-
serted into the Central Excise & Salt Act, 1944 providing for the mode 
of valuation. The period involved in this appeal is from 27.9.1974 upto !':
31.5.1977. Therefore, the period upto 30.9.1975 would be covered by 
H the old s.4 and from 1.10.1975 till 31.5.1977 the provisions of new 
section would apply for determining the assessable value. [320E] 
318 
MYSORE ROLLING MILLS v. CENTRAL EXCISE 
319 
(2) As per arrangement between the appellant and its customers, 
the appellant was permitted to lift the allotted ingots directly and after 
carrying out the manufacturing process it used to deliver the same to the 
customers. [321C-D] 
(3) There has been no sale of the material between the appellant 
A 
and the customers. The appellant was collecting Rs.600 per metric ton as 
B 
conversion charges and Rs.60 per metric ton as handling charges. [320G] 
(4) The handling charges were intended to cover the appellant's 
expenses in lifting the ingots. The Tribunal has come to the right con-
clusion in holding that the handling charges represented pre-manufactur-
ing cost and became part of the value for computation ~f duty. [321D-E I 
(5) Rule 9 which corresponds to s.11-A of the Act provided a 
period of one year for taking of proceedings while Rule 10 correspond-
c 
ing to the present s.11 of the Act prescribed a period of three months for 
such purpose. With effect from 6.8.1977, the period of six months was 
substituted for the period of three months and the period of live years 
D 
substituted for the period ofone year. [321B-C) 
( 6) The rule is intended to relate back and cover a period of live 
years from the date jurisdiction under the rule is invoked. The provi-
sion, is therefore, retrospective in operation. [321G) 
(7) Once the rule comes into existence and jurisdiction under the rule is 
invoked, it has got to cover. a period upto live years preceding the date 
of issue of notice. [321H] 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4542 (NM) 
E 
of 1985. 
P 
From the Order dated 10.6.1985 of the Customs Excise and Gold 
(Control) Appellate Tribunal, New Delhi in Appeal No. ED(SB) (T) 
A. No. 88 of 1980-A. 
M. Chandrasekharan, V.J. Francis, N.M. Popli for the Appel-
G 
!ant. 
B. Datta, Additional Solicitor General, Ms. S. Relan and Mrs. 
Indra Sawhney for the Respondent. 
The Judgment of the Court was delivered by 
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G 
H 
320 
SUPREME COURT REPORTS 
[1987] 2 S.C.R. 
RANGANATH MISRA, J, This appeal under section 35-L of 
the Central Excises and Salt Act, 1944 is directed against the decision 
of the Customs, Excise and Gold (Control) Appellate Tribunal up-
holding the decision of the Appellate Collector of Central Excises, 
Madras. The short facts relevant for disposal of this appeal are that the 
app

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