LexUNION OF INDIA & ORS. ETC. ETC. versus BOMBAY TYRE INTERNATIONAL LTD. ETC. ETC.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
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347
UNION OF INDIA & ORS. ETC. ETC.·
v.
BOMBAY TYRE INTERNATIONAL LTD. ETC. ETC.
October 7, 1983
[P.N. BHAGWATI, R.S. PATHAK AND AMARENDRA NATH SEN, JJ.)
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Central ExciseS and Salt A.ct, 1944 (1 of 1944)-0/d s. 4 prior to and new
s. 4 after a1nendment by the .Cen1ral Excises and Salt (An1endn1ent) Act, 1973
(22 ~! 1973) ..:...interpretation of-Sectioll val(dly enacted-Scheme and o/Jjeci of
olds. 4 and news. 4 are sa1ne. ~Mode of deterndning value of an article/or e:Xcise
leVy-Vcilue-Whether can be confined to manufacturing cost and manufacturing
profit only-Whether pos.t ma11ufact1irlng,eXpenses like freight,· insurance and
packinK etc.- can be iiicluded in the value of article.
, . Central Excises and Salt Aci, 1944-S. 4 (4) (c)-De/in1tion of "relate<!
person"-SCope of. Definition not unduly wide-DoeS not suffer from constitutional
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infirmity . . Words "a relative and a distributOr of tire Assessee" dO not· refer to
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any distributor but only to a distributor who is a relative of the asses.see wirhln the
meaning of the Companies Act, 1956 •
Central Excises arid Salt Act, f944-S. 4 (4) (d)-'Value'~Definition of-
.scope of. Pqcking-Primary, secorfary and special secondary-Cost of sPecia/
secpndary packing to be excludedfro111 WJl,ue.
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Constitution of India Art. 246, Schedule 7, List J. Eniry 84-Concept of
duty of excise-What is.
Sub-s~c .. (1) of sec. 3 of the Central Excises and Salt Act, 1944 provided'
that duties of excise shall be levied and collected on all excisable goods, other
than salt which were· produced or 1nanufactured in India at the rates set.for.th
in the First Schedule. Sub-sec. (2) of sec. 3 empoWered the Central Government
to fiX, for the pµrpose of le\•ying the duties, tariff values of ihe articles
· cnumerate.d jn the First Schedule as chargeable with duty ad valoren1. Section· 4
of the ACt prodded that the value of an article for the purposes of duty shall
be {a) the w4olesale cash price for which an article of the like kir.d and quality
was sold oi- was capable of being sold at the time removal of the article
chaJ.geable with duty froln .the factory' or any other premises of inanufacture
or production for dClivery at the -place of manufacture or production or
(b} where
1such price was not ascertainable, the 'price at which ari
article of the like kind ·and quality was sold or. was capable of being sold
at the time of the removal of the article ch"argeable with duty from such
factory or other pr'emises for deli.very at the place of manufacture or prodUction.
With the increase in· the ad• valoren1 levies in the Central Excise Tariff .the
oPeration 9f sec. 4 presented certain practical difficulties, sOme of which were
prominently brought out in the judgment of this Court in A.K. Roy dnd Anr. v.
Valtas Ltd., [1973] 2 S.C1R:. 1039 .. In ~hat case, the Coµrt. ilf:ier alia said th~t
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b.
348
SUPREME COURT REPORTS
(1984i I S.C.R.
the real value of an article for the purposes of the excise levy would include
only the manufacturing cost plus manufacturing profits. In o~der to overcome
various difficulties, the original sec. 4 of the Act was . substituted by a new
sec. 4 by Act 22 of 1973. The new sec. 4 provided that the v3.lue of an article
for the purposes of duty shall, subject to the other provisions of this section,
be deemed. to b_e the normal price thereof that is to say, the price at which such
goods were ordinarily sold by the asscssee to a buyer in the course of wholesale
trade for delivery at the .time and placC of remov'aJ, where the buyer was not a
related persOn and_ the price was the sole consideration for the sale and where
,,the normal price of such g0ods was not ascertain~ble for the reason that such
'goods were not sold or for any other reaSon, the nearest asFertainable equiva ..
lent thereof determined in such manner as may be prescribed. Clauses (c) and
(d) Of s:ib .. sec. (4) of sec. 4 defined "related pc;;rson" and ''value•: respectively.
The Central issue which arose between the Revenue and the assessees
in these appeals was whi':ther the value of an article for the purposes of the
excise levy must be determinCd by reference exclusively to the manufacturing
cost and the manufacturing profit of the manufacturer as contended bY the
assessees or shOUld be represented by the eritire wholesale pric.e charged by the
nianufacturer which consisted of not merely his mExcerpt shown. Read the full judgment & AI analysis in Lexace.