UNION OF INDIA versus INDALCO INDUSTRIES

Citation: [2003] 3 S.C.R. 377 · Decided: 03-04-2003 · Supreme Court of India · Bench: S.S.M. QUADRI · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

UNION OF INDIA 
A 
V. 
INDALCO INDUSTRIES 
APRIL 3, 2003 
[SYED SHAH MOHAMMED QUADRI AND ASHOK BHAN, JJ. ] 
B 
Central Excise Act, 1944-Sections 4(/)(a) and (b) and I I-A-Levy of 
excise duty-Allegation of non levy and short levy due to clandestine removal 
of goods and incorrect valuation-Show cause notice demanding duty on both C 
the grounds-Notice challenged by assessee-High Court dismissed the writ 
petition with regard to clandestine removal-However disposed of the petition 
in respect of incorrect valuation-On appeal, held-Show cause notice 
regarding incorrect valuation was without jurisdiction as it had proceeded on 
the basis as if valuation were to be under Section 4(/)(b) while the valuation 
were to be under Section 4(/)(a)-Assessee cannot be denied relief on one D 
aspect on the ground of lack of jurisdiction of the authority merely because 
authority was held to have jurisdiction on another aspect-Central Excise 
Valuation Rules, 1975-Rules I to 7. 
Constitution of India, 1950-Articles I 36 and 226-Taxation matters-
lnterference with at the stage of show cause notice-Propriety of-Held, E 
generally it is inappropriate for High Court to interfere-But this limitation 
is self imposed by the Court and the same is not matter of jurisdictional 
factor-In the facts of the case, writ petition having been decided on merit by 
High Court, it is inappropriate to upset order of High Court under Article 136 
on technical ground. 
F 
Revenue issued show cause notice against the respondent-assessee 
under Section 11 A of Central Excise Act, 1944 demanding duty on the 
allegation that due to clandestine removal of goods and incorrect valuation 
of the goods of the respondent-assessee, there had been non-levy and short 
levy of excise duty. The assessee without replying to the show cause notice, G 
challenged the same before High Court in a writ petition. In so far as 
paragraphs 1 to 13 of the show cause notice which related to the 
clandestine removal of the goods were concerned, High Court dismissed 
the writ petition. With regard to the valuation of the goods mentioned in 
paras 14 to 18, High Court quashed the above paras taking the view that 
377 
ll 
378 
SUPREME COURT REPORTS 
(2003) 3 S.C.R. 
A no enquiry was made by the appellant with regard to the aspects stated 
thereunder and the writ petition was disposed of. 
In appeal to this Court Revenue contended that High Court ought 
not to have decided the case on merit at the stage of show cause notice; 
and that High Court having found that Revenue had jurisdiction to issue 
B notice u/s t1A in respect of Paras I tol3 regarding clandestine removal 
of goods, it should not have issued writ of prohibition in respect of 
valuation of goods and should have directed the assessee to file reply in 
respect of the same. 
C 
Respondent-assessee contended that Section 4(l)(b) of the Act cannot 
be invoked when the goods are sold in the wholesale trade and they are 
to be valued under Section 4(1)(a) on the basis of normal price thereof, 
therefore, the authority had no jurisdiction to issue the notice and hence 
High Court was right in issuing the prohibition; and that if two cases are 
clubbed in one notice, one without jurisdiction and the other with 
D jurisdiction, the writ petitioner cannot be denied remedy in the other cause 
on the sole ground that in one cause the authority was held to have 
jurisdiction in the matter. 
Dismissing the appeal, the Court 
E 
HELD: 1.1. A reading of Section 4(1)(a) of Central Excise Act, 1944 
F 
makes it clear that where duty of excise is chargeable on the excisable 
goods with reference to value, the normal price at which the goods are 
ordinarily sold to a buyer by the assessee in the course of wholesale trade 
for delivery at the time and place of removal will be the measure of charge. 
This is subject to (i) the buyer is not the related person and (ii) the price 
is the sole consideration for sale. The question of determination of the 
nearest ascertainable equivalent thereof would arise where the normal 
price of such goods is not ascertainable either because (a) such goods are 
not sold or (b) for any other reason like the normal price being incorrectly 
represented, etc. All the requirements of Section 4(1)(a) are fulfilled; the 
G buyer is not a related person and that the price is the sole consideration 
for sale. The goods in question are, therefore, assessable to excise duty 
with reference to the normal price at which s

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