PROCTER & GAMBLE HYGIENE & HEALTH CARE LTD. versus COMMISSIONER OF CENTRAL EXCISE, BHOPAL.

Citation: [2005] SUPP. 5 S.C.R. 496 · Decided: 28-11-2005 · Supreme Court of India · Bench: ASHOK BHAN · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
PROCTER & GAMBLE HYGIENE & HEAL TH CARE LTD. 
B 
v. 
COMMISSIONER OF CENTRAL EXCISE, BHOPAL. 
NOVEMBER 28, 2005 
[ASHOK BHAN AND S.H. KAPADIA, JJ.] 
Central Excise Act, 1944/Central Excise Tariff Act, 1985; Chapter 34 
of the Schedule to the Act with amendment; Ss. 2(/), 3, 4(4)(d)(i) and 1 lA(J): 
Valuation-Detergent powder-Repacking in sachets from bulk packs-Levy 
of differential amount of duty-Justification of-Held: Taxable event took 
place when detergent powder manufactured-Tribunal ought to have decided 
the assessable value of bulk packs of the product in question as at the factory 
gate-Since repacking in sachets did not amount to manufacture at tf:le 
relevant time, tribunal ought to have decided the justification of assessing 
the value of bulk packs based on retail price of sachets for the purpose of 
levying of excise duty by the Revenue-Tribunal also erred in not considering 
the defence of the assessee in the context of suppression of facts and also on 
invocation of extended period of limitation-Hence, the matter .remitted ta, 
the Tribunal for decision afresh in the light of the principle laid down. 
The question which arose for determination in this appeal was as to 
whether, on the facts and circumstances of this case, cost of repacking of the 
product Ariel Micro System (AMS), detergent powder into 20 gms. and 30 
gms. Sachets from the bulk packs of the product, which did not amount to 
manufacture at the relevant time, was includible in the assessable value of 
the product in question which was manufactured and cleared by the assessee/ 
appellant in bulk packs of 25 kgs. and engaged another firrn for repacking 
of the product into sachets from bulk packs. 
Appellant-assessee contended that the show-cause notice issued by the 
Revenue did not contain allegations regarding valuation of 25 kgs. bulk packs 
and the demand of differential amount of duty was made only on the basis of 
the price of 20 gms. and 30 gms. Sachets; that since repacking did not 
constitute "manufacture" at the relevant time, the demand for differential 
amount of duty only on the basis of the price of the sachets was untenable in 
law; that the value of the bulk packs was approved by the Revenue as declared 
4% 
..... 
PROCTER & GAMBLE HYGIENE & HEAL TH CAREL TD. 1•. COMMR. OF CENTRAL EXCISE 
497 
in the price list for captive consumption and, therefore, there was no question A 
of suppression of facts; that since the clearance of the bulk packs was for 
captive consumption and not for sale, the concept of"normal price" was not 
applicable; and that the tribunal has not at all gone into the question of 
valuation, particularly, when the entire case related to the scope of section 
4( 4)( d)(i) of the Act; 
Revenue submitted that during the relevant period, the product in 
question was manufactured by the assessee and not by the firm engaged in 
manufacturing sachets, and therefore, the authorities were right in demanding 
the differential duty on the price of the sachets; that the assessee removed 
B 
the detergent powder in bulk packs from the factory gate with the sole C 
intention of getting it repacked into sachets; that the assessee had deliberately 
declared only the cost of the bulk packs but suppressed the price of the 
product; that the firm engaged in repacking was an independent job worker 
and was not an extended arm of the assessee; that the retail packs were in 
fact cleared through the depots of the assessee and in the circumstances, the 
authorities were right in coming to the conclusion that there was a wilful D 
suppression on the part of the assessee. 
Allowing the appeal, the Court 
HELD: 1.1. The levy of excise duty is on the "manufacture" of goods. 
The excisable event is the manufacture. The measure or the yardstick for E 
computing the levy is the "normal price" under Section 4(1)(a) of the Central 
Excise Tariff Act. [503-E] 
Union of India & Ors etc. v. Bombay India International Ltd etc., AIR 
(1984) SC 420 and Sidhartha Tubes Ltd v. Collector of Central Excise, (2000) 
115 ELT 32, referred to. 
F 
1.2. The concepts of "manufacture" and "valuation" are two different 
and distinct concepts. The present case is concerned with valuation. Value is 
the function of price under section 4(l)(a) of the Central Excise and Tariff 
Act. The taxable event took place when detergent powder was manufactured 
by the assessee. The said powder was packed into bulk packs of 25 kgs. They G 
were cleared from the fac

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