THE TATA IRON & STEEL CO. LTD. versus COLLECTOR OF CENTRAL EXCISE, JAMSHEDPUR

Citation: [2002] SUPP. 3 S.C.R. 244 · Decided: 24-10-2002 · Supreme Court of India · Bench: S.N. VARIAVA · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
c 
THE TATA IRON & STEEL CO. LTD. 
v. 
COLLECTOR OF CENTRAL EXCISE, JAMSHEDPUR 
OCTOBER 24, 2002 
[S.N. VARIAVA AND BRIJESH KUMAR, JJ.] 
Essential Commodities Act, 1955; Sections 2a(ii) and 3; Iron Steel 
(Control) Order, 1956; Clauses 15 and 17B; Notification Nos. (1)-l(S) 71-B 
and SC/16(6)191: 
Essential Commodities- Regulation of Price-Iron & Steel (Control) 
Order-":Controller authori:t.ed to fix price- Addition of elements to ex works 
price by Jt. Plant Committee/Steel Priority Committees-Imposition of excise 
duty-Challenge of-Held, such additions could appropriately be classified as 
D elements of price and not as compulsory exaction from the purchaser-It can 
not be treated as tax and thus not a permissible deduction from levy of excise 
duty-Central Excises and Salt Act, 1944; Section 4(4}(d)(ii) 
Words and Phrases: 
'Compulsory exaction' in the context of other taxes under Section 
E 4(4)(d)(ii) of the Central Excise Act. 
Under Section 3 of the Essential Commodities Act, to regulate the 
price, Government oflndia issued the Iron and Steel (Control) Order and 
also set up Joint Plant Committee and Steel Priority Committee to 
discharge various functions enumerated in the notifications, which 
F included addition of elements to the ex-works price. The Excise 
Department claimed that excise duty was payable even on the component/ 
elements added to the ex-works price. 
G 
H 
In appeals filed by the Steel Companies and Revenue, the questions 
which arose were-
(i) 
whether the elements added to ex works price as per 
recommendations of the JPC were admissible deductions 
under Sections 4(4)d(ii) of the Central Excises and Salt Act, 
1944; 
(ii) whether such additions could be considered as price and liable 
. 
244 
. 
THETA TA IRON & STEEL CO. LTD. v. C.C.E. 
245 
for excise duty. 
It was contended for the Steel Companies that elements compulsorily 
added to ex-works price by the Iron and Steel Companies are compulsory 
exaction and could appropriately be classified as other taxes and liable 
for deductions from imposition of excise duty under Section 4(4)(d) (ii) 
of the Central Excise Act. 
A 
B 
On behalf of the Revenue, it was submitted that under the Central 
Excise Act, excise duty is chargeable on the value of the goods and value 
is the price on which excise duty could be levied; and that levy is not a 
tax, it does not fall within the meaning of the term 'other taxes' and not 
liable for deductions from assessable value of the goods. 
C 
Allowing the Revenue's appeals and dismissing the assessees' appeals, 
the Court 
HELD: I.I. Excise duty under the Central Excise & Salt Act, 1944 
is chargeable on the value of the goods. The value is the normal price at 
which such goods are ordinarily sold by the assessee to a buyer, where 
the buyer is not a related person and the prke is the sole consideration 
for sale. From the price at which the assessee selis to the buyer the only 
deductions permissible are those under clause 4(4)(d)(ii) i.e. excise, sales 
tax and other taxes and in certain cases trade discounts. [255-C-DI 
1.2. Even though the Essential Commodities Act empowers 
regulation of price, it does not empower imposition of any taxes. The 
addition of an element to the ex-works price has no statutory backing or 
force. It is not by the Central Government or the State Government or 
D 
E 
any local authority. It is a levy by a Committee majority of whose members F 
are representatives of the steel plants. The purpose of creating funds is 
for the benefit of these member steel plants. Such a levy, even though it 
may be compulsory, can never be a tax. 1256-D-El 
Commissioner of Central Excise, Meerut v. Kisan Sahkari Chinni Mills 
Ltd., (2001) 132 ELT 523 S.C., referred to. 
G 
2.1. The Notification makes it clear that what has been added is an 
"element of price". Neither JPC nor the SPC could have made any 
compulsory exaction from the purchaser. They could only regulate prices 
as the powers which they derived are only those which are conferred on H 
246 
SUPREME COURT REPORTS (2002] SUPP. 3 S.C.R. 
A them by the Notification which established them. Clause 8 of the 
Notification dated 7th April, 1971 only gave a power to determine the 
prices. The amended Clauses (9A) and (98), which were introduced by 
Notification dated 27th December, 1978, also empowered them merely to 
add elements to the ex-works price. In other words, the ex-works price 
B could be increased by adding an element to 

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