TEXMACO LTD. versus COLLECTOR OF CENTRAL EXCISE, CALCUTTA

Citation: [1991] 3 S.C.R. 323 · Decided: 31-07-1991 · Supreme Court of India · Bench: M.N. VENKATACHALIAH, S.C. AGRAWAL · Disposal: Appeal(s) allowed
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Judgment (excerpt)

TEXMACO LTD. 
A 
v. 
COLLECTOR OF CENTRAL EXCISE, CALCUTTA 
... 
JULY 31, 1991 
1 
[M.N. VENKATACHALIAH AND S.C. AGRAWAL, JJ.] 
B 
Central Excise Rules, 1944-Rule 8-Notification No. 120/75 
CE-D /-30. 4. 1975-Clause (iv )-Exemption from levy of duty-Value 
of wheel sets supplied by Railways-Whether exempted. 
The appellant pursuant to contracts entered into with the Railway c 
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Administration fabricated and delivered to the Railways wagon-bodies 
mounted on "wheel sets" supplied by the Railways, 
The appellant's invoices, reflected only the price of the wagon-
bodies without including the value of the "wheel-sets" on which the 
wagon-bodies were mounted. The goods were cleared for purposes of D 
Excise duties on such invoice-value. 
The Revenue raised demand for recovery of short-levy and sought 
~· 
to recover the unpaid duty on the value of the "wheel-sets" also. 
• 
The claim for recovery of the short-levy having been adjudicated 
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against the appellant, appeals were filed before the Tribunal, by the 
appellant contending that the goods manufactured by the appellant 
were only the wagon-bodies mounted on the "wheel-sets" supplied by 
the Railway Administration; and therefore, the assessable value could 
' 
only be the value of the wagon-bodies excluding the "wheel-sets" sup-
plied by the Railways; and that at all events the value in excess of the 
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'invoice value' which represented the price of the wagon-bodies was 
exempt from levy of duty under the Exemption Notification No. 120/75-
CE dated 30th April, 1975 issued under Rule 8 of the Central Excise 
Rules, 1944. 
The Tribunal dismissed the appeals, against which, the present G 
appeals were filed before this Court. 
,. 
The appellant contended that the Tribunal misdirected itself in 
law in its construction of the exemption Notification and in its reasoning 
that there was something in Clause (iv) of the Notification which 
detracted from the permissibility of its benefit in the present case; that H 
323 
A 
B 
324 
SUPREME COURT REPORTS 
[1991) 3 S.C.R. 
it was erroneous to read the condition as requiring the 'invoice value' to 
he the full commercial price of the goods including therein the value of 
the "wheel-sets"; that the very purpose of the exemption was to relieve 
the manufacturer from heaiing the burden of the duty on such part of 
the assessable-value as did not reflect the value of his •upply and 
services but represented the value of the "wheel-sets" supplied by the 
Railway Administration itseilffree of charge. 
The Revenue-Respondent contended that Clause (iv) of the Notifi-
cation signified and imported the idea of full-value of the manufactured 
goods being required to be reflected in the invoice and that the reason-
ing of, and the conclusion reached by, the Tribunal was correct. 
,,.-
c 
This Court allowing th" appeals, 
HELD. I. The Notification posits and predicates the possibility 
that the invoice-value' could be lesser than the "assessable-value" and, 
taking into account the need to mitigate the hardship on the manu-
D 
facturer of being called upon to pay duty on the value in excess of 
the invoice value, seeks to exempt the manufacturer from payment of 
duty "inexcess of the duty" calculated on the basis of the 'invoice-
price'. [328G-H) 
2. The way in which lthe Tribunal looked at the Notification is 
E 
neither good sense nor good law. Such construction would make the 
Notification and the exemption contemplated thereunder meaningless. 
The need for the exemption arose in view of the fact that "assessable-
value" was higher than the ''invoice-value'. Requiring the former and 
the latter to be the same as something compelled by Clause (iv) is really 
to construe the Notification against itself. [329B-C) 
F 
3. In this case, there is no dispute that the invoice price rep-
resented the value of the wagons, less the value of the "wheel-sets" 
supplied by the Railways. The invoice-price could not be reqnired to 
include the value of the "wheel-sets". But the "assessable-value" 
would take into account the full commercial value including that of the 
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"wheel-sets". It is in order to mitigate the hardship that may arise by 
requiring the manufacturer to pay duty on this difference in such cases 
that the Notification No. 120/75 came to be promulgated. [328H-329B I 
4. There is nothing in Clause (iv) which enjoins upon the appel-
lant to include the value of the "wheel-sets". The contract between the 
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parties does not also requir
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